Meesho: India's next e-commerce leader?

Hey there,

Meesho just posted revenues of over ₹5500 Cr with a 50% reduction in losses! With this growth, can Meesho become the #1 e-commerce company in India by 2024?

Founded in 2015 by IIT Delhi graduates Vidit Aatrey and Sanjeev Barnwal, Meesho is a social commerce startup that has impressively raised more than $1 billion in funding, valuing it at $5 billion.

Despite previous years of heavy losses, Meesho's financials for FY23 tell a story of remarkable recovery:

• In FY22, Meesho reported revenues of ₹3232 Cr against losses of ₹3247 Cr.

• In FY23, revenues went up to ₹5735 Cr, while losses were almost halved to ₹1675 Cr.

In fact, Meesho turned operationally profitable in July 2023, based on a PAT metric. Thanks to these three strategic moves:

1. Building a lean team: Meesho focused aggressively on building an extremely lean team.

Since 2020, Meesho has laid off close to 1,000 employees, in a pursuit to remove redundancy and operate with an optimally streamlined staff for maximum productivity. This helped increase revenue earned per employee.

2. Cost-cutting measures: Meesho ruthlessly reduced costs across all operations - From achieving 50% savings in cloud infrastructure spending to bringing down customer acquisition costs from Rs 250 two years ago to around just Rs 50 now.

3. Revenue growth: The first half of FY 2024 saw Meesho's revenue exceed its total revenue for FY 2022. This growth, coupled with a 90% reduction in losses to Rs 141 crore, reflects the company's successful expansion of transaction frequency and diversification of revenue streams.

This includes value-added services for sellers and fees from select brands on Meesho Mall.

Meesho's ability to turn around from over Rs 3,000 crore in losses in FY2022 to operational profitability by July 2023 demonstrates its renewed focus on building a sustainably profitable business.

With the right strategies, Meesho could potentially become India's #1 e-commerce company by 2024. Its progress highlights the outsized impact of building within constraints with a lean and hungry team.

✏️ Jargon of the day

Operationally Profitable

Being operationally profitable means a company is making more money from its regular business activities than it spends. It's when the income from selling products or services is enough to cover the basic costs of running the business, like paying employees and buying materials.

This doesn't include extra expenses like loans or taxes. It's a good sign because it shows the company's main business is doing well enough to sustain itself.

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Cheers,
Karthik