Business Model of MEESHO | How does MEESHO earn money in 2021?

MEESHO (in short for “meri shop”) is an online, commercial platform prominently used for the purpose of selling and reselling goods using different modes of social media platforms such as Facebook, Telegram, WhatsApp and Instagram. 

Founded by Vidit Aatrey and Sanjeev Barnwal in 2015, the company became one of the first start-ups in India to acquire investments from social media platforms, Facebook. This e-commerce platform gives access to multiple individuals for the resale of goods which mainly is consisting of housewives or senior people. Consisting of more than a million dealers on its platform, MEESHO is geared with over 17 million distributors, 15 million of them are women, and 60,000 suppliers. 

Following its recent fundraising round, it became only the sixth Indian firm to join the elite Unicorn club, with a valuation of more than $2 billion. This platform opened up a site of opportunities as there wasn’t a limit to who can join. Students, business people, homemakers, salary wagers, and anyone looking to earn an income can all become members of MEESHO.

History and Business Development of MEESHO

Technologies Private Limited to MEESHO Ecommerce
FASHNEAR Private Limited

IIT graduates, Vidit Aatrey and Sanjeev Barnwal developed an ideal structure of developing a startup that enabled a figure to empower women. Initially, under the name FashNear, the purpose of the startup was to make stores sign up for their service and a user would select their requested goods sold by the store. Then, FashNear would build up delivery structures that would enable the delivery of their goods (in a similar fashion to Zomato and Swiggy). 

The downfall of the FashNear model had been procured when founders had realized that the business structure was not viable as the local shops in comparison to 24/7 e-commerce platforms which was a big disadvantage.

Consequently, MEESHO was developed. 

After prototyping a structure, they built a platform where any shopkeeper could connect on to Meesho using their Facebook login credentials, following which all of their data would be transferred and a web page for their business would be generated in a matter of seconds. With the exception of the WhatsApp approach used by some businesses, Meesho also assisted with auto stocking and inventory control. 

The four main aspects for the functioning of the application are :-

  1. The supplier 
  2. The reseller 
  3. The company (MEESHO)
  4. The consumer 

Meesho often charges a regular delivery price plus a commission of 10-20%, depending on the goods. When the items are returned, the app imposes a steep penalty. This promotes higher-quality items, a more devoted and trustworthy consumer base, and honest merchants.

After the commencement, the founders had gathered data that prominently the shops online were put up by women, primarily housewives. These gathered to be the small businesses that had to be run from home and had not a lot of space for inventory. These individuals would put up their products on the website, would take pictures of the products, and then would forward it around in their social media platforms (prominently WhatsApp).

The people present in these online, social communities would have access to these products to be purchased in an easier function and would use that to spread it around to other groups and communities using these social media platforms. It appears to be an easier solution as the supplier saves money on logistics, the reseller receives money from their margin on each commodity, and Meesho is paid by the provider.

The structural growth of the startup because of the adopted business model had become a huge success and the company had acquired to become a mediator between the reseller and the supplier. 

Funding of MEESHO

Y Combinator, a USA-based startup accelerator, had picked up on MEESHO in 2016 for a summer program and the company had obtained upto $120,000. The company stood up to $515.2 million after nine rounds of funding, calculating how much they’ve earned throughout the past six years. In 2017, MEESHO had gone up to raise $3.1 million funding of Series A acquiring it from SAIF Partners who are a ventured capital firm in India. 

By June 2019, Facebook had invested in the company. The company had blown up by acquiring these investments and had made it all over Twitter with the news of major conglomerates investing in an Indian-based startup. 

As the number of online buyers, particularly from tier 2 cities and beyond, continues to increase, social commerce is predicted to be worth $70 billion by 2025, and total e-commerce will be worth to be about $200 billion.

Although because of the Covid pandemic the company had faced a downhill and the small businesses underneath it faced even more sharp aggression. This was then fought back by the company after the restrictions had been no longer a hassle and the businesses saw a 20-30 rise in their business levels. This had made it to be a big change as it was comparatively higher in levels than before the pandemic had hit. 

Meesho is now valued at $2.1 billion, up from $700 million in its previous fundraising round of $125 million in 2019. Moreover, It intends to expand even further now that it has received a cash injection from its most recent round of investment.

Along with acquiring such peak values, MEESHO had received its glory name for the founder’s names included in Forbes 30 under 30 (Retail and Ecommerce category). Also in 2018, it had been part of the LinkedIn list “Top Startups List for India’ and had be named under the top 25 candidates. 

The four components of MEESHO
The four main components.

Revenue Model of MEESHO

Earning Commission

The company essentially makes money by acting as a middle figure between the reseller and the supplier. They make money by charging the main sellers a certain fee for each sale that is made through the platform. Swiggy and Zomato acts as a middleman between local restaurants and the consumers. These services can be facilitated as an example to show that startups such as these see commission as a key figure for earning their revenue. Both these online, food delivery platforms take a cut of 18%-25% worth of commission from the restaurant that the order is placed through. Thereafter, we also see that through MEESHO, the commission rate charges various values of every product value through the registered business/seller.  

MEESHO commission advertisement

Logistical Value

Another service provided by the company would be their delivery availability to reach the consumers. The registered businesses/seller would be accumulated with delivery availability to their consumer for the product to be delivered and through such; MEESHO charges a delivery fee for the logistical operation to be serviced. The company spends about 91% of the earning revenue on the delivery aspect. This entails in order for MEESHO to receive back in charges, as well. 

SEO and Data

The same way blogs boost different SEO techniques to stand out with their content, MEESHO does too. A source of revenue received would be through boosting the products put out by a registered business/seller to the top of the page so that the consumers will have their eyes placed on the product first. 

Sale of data is also another way the company earns its revenue but in the authorized fashion which does not violates Privacy Policies given by the company in any way. This establishes well within the spectrum of the terms and regulations that entail under the Privacy Policy of the company. 

Conclusion

MEESHO has a great way for the generation of revenue but along with the purpose of a good intention behind it. The reasoning taken behind this company has been ever-so inspiring and to build the business structure based on the interactions from their own suppliers and local businesses, brings in a stronghold for the startup. MEESHO now covers about 5000 cities in reach.

Due to its unprecedented marketing strategy and effective campaign planning, the company has stood high on ground with a good value of revenue generation. An advertising campaign they put out would be the #SabseKamCommission that stood out to the resellers and suppliers. These advertising campaigns also help reach out to those who may be homemakers or small business people trying to make their way into income generation. There had been cases of selling fake products and unreliable goods being delivered due to unsupervised monitoring. The quality of the goods coming received was not accessible to view in the catalogs put out by these businesses and sellers. 

Rightly so, MEESHO has gained its name up the ladder. 

Frequently Asked Questions (FAQs)

Is MEESHO B2B or B2C?

MEESHO follows a B2C model structure. The structure follows :-

Seller/Supplier -> Reseller -> MEESHO -> Final Consumer 

These products are put up for sale on the MEESHO website on multiple social media platforms such as WhatsApp, Facebook and Telegram for easier access by the resellers. Meesho establishes relationships with suppliers and manufacturers. Resellers may use the Meesho app to order the product they want without having to contact the supplier. This structure enables direct contact between the company and the supplier as well without the reseller getting involved. 

How does MEESHO make money?

MEESHO generates its income in multiple ways of funding and generation of revenue. The different ways the company generates revenue is by earning commission through the orders placed for the primary business, logistical services (delivery of goods), SEO boosting of a supplier’s product, and more. Usually, they generate money by charging the platform’s primary merchants a fee for each sale completed through it. Most of the revenue generated by MEESHO is through logistical support such as delivery systems.

How do I get customers in MEESHO?

This can be categorized to whether you’re a supplier or a reseller. If you’re a supplier, all you have to do is upload images of your product and the reseller will place an order for you accordingly. If you’re a reseller, there are a few different steps to go through. 

  1. Register on the MEESHO website/application.
  2. Accordingly, you may select and browse through the product you wish to resell. 
  3. On your preferred social media platform, you may upload pictures and product details with the price entailed and your desired range. 
  4. When a consumer seems interested, send them confirmations on the product price and quantity/quantity. 
  5. Accordingly after, the product Accordingly after, the product code and the customer’s address should be mentioned and then placed as an order including your margin rate. 
  6. After the timely delivery by MEESHO, your tab of the margin will be deposited in your bank account.  

How do I start a MEESHO business?

Starting out to be a supplier on MEESHO is an easy deal considering you have your products ready to be supplied out. If you’re a business person who is starting out new, the importance of having your own page is deemed to be highly important for growth of your business.

  1. Register on the Supplier page on the MEESHO website. 
  2. Upload good quality pictures of your product to be sold. 
  3. The reseller will take over from then and sell your product. 
  4. The order will be placed and sent through to you. 
  5. Make sure to pack the order and MEESHO will deliver the product for you to the consumer. 
  6. The payment will then be received by you transferred through MEESHO account.

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