In an impressive turn of events, Meesho, the Bengaluru-based e-commerce giant, has announced a remarkable 33% increase in its revenue for the fiscal year 2023-2024, reaching Rs 7,615 crore, up from Rs 5,735 crore the previous year. This notable growth comes alongside a dramatic reduction in the company’s adjusted loss, which has been narrowed down to Rs 53 crore—an eye-popping 97% decrease from the previous year’s loss of Rs 1,569 crore. The achievement of operating cash flow positivity illustrates the firm’s strong financial recovery and operational efficiency.
Meesho’s success is notably derived from its innovative approach in primarily catering to non-metro markets, where it has solidified a robust customer base. The company’s adjusted loss excludes non-operational expenses, such as employee stock ownership plans (Esop), asset impairments, and other extraordinary costs—emphasizing the real performance of the business. Interestingly, there was a Rs 200 crore Esop buyback program announced earlier this year, which likely contributed to the firm’s improved financial standing.
Meesho’s financial progress can be attributed to several strategic enhancements. The number of annual transacting users significantly increased, alongside a boost in order frequency among existing customers. For the fiscal year 2023-24, Meesho delivered approximately 843 million orders, marking a 36% rise compared to the previous year. Moreover, annual transacting users reached 145 million, a statistic that underscores the growing acceptance of the platform among consumers.
The company’s executives have made it clear that the advancements in artificial intelligence (AI) and machine learning have played pivotal roles in refining product discovery and enhancing customer service experiences. These technological upgrades have allowed Meesho to stay competitive against industry giants like Flipkart and Amazon, both of which target budget-conscious shoppers through unique offerings—Flipkart’s Shopsy and Amazon’s Bazaar.
Funding has also been a crucial element in Meesho’s recent performance. Earlier this year, the firm successfully closed a $275 million funding round, heralding the first step of a larger funding initiative projected to reach between $500 million to $600 million. This, combined with a total of $1.36 billion raised since its launch in 2015, exemplifies significant investor confidence in the company’s potential.
One key area where Meesho has improved is in its operational costs. The selling, general, and administrative expenses as a percentage of operating revenue have seen a considerable decline, attributed largely to organic traction and heightened consumer awareness of the brand. This strategic reduction in operating costs has allowed the company to offer competitive pricing and attract a broader customer base.
Furthermore, Meesho has optimised its logistics costs through the establishment of Valmo, a logistics marketplace that collaborates with regional and small logistics providers. This move has streamlined operations and enhanced shipping efficiencies, effectively catering to the needs of its diverse customer base spread across various regions, including tier-III and tier-IV cities.
The recent Meesho Mega Blockbuster Sale also saw exceptional results, demonstrating the brand’s capacity to engage emerging markets effectively. The promotion recorded a 40% growth in total orders during its operational period from September 27 to October 6, with an astonishing 145 crore customer visits—an indicator of the brand’s rising popularity. Additionally, the sale attracted a 45% increase in new-to-ecommerce users, a critical metric showcasing the expansion of digital commerce in Indian markets previously less engaged in online shopping.
Meesho’s growth trajectory positions it uniquely within the Indian e-commerce landscape. By not charging commissions from sellers, as is customary in traditional platforms, Meesho operates a distinct revenue model that allows it to focus on enhancing service offerings and advertising. Consequently, this approach has enabled the firm to build a loyal seller community attracted to low operational costs and supportive customer service frameworks.
As the company looks to the future, it is reportedly in discussions to explore a potential initial public offering in India, marking a significant transition that could further cement its standing in the market. The increasing demand for high-quality, affordable products from tier 3 and smaller markets showcases the growing consumer base that Meesho can tap into, particularly through strategic partnerships like the one with Mamaearth, which aims to boost the availability of toxin-free beauty products in less urban areas.
In conclusion, Meesho’s successful financial turnaround, driven by innovative technology, strategic collaborations, and an unwavering focus on emerging markets, positions it well to continue thriving in a competitive e-commerce industry. The company’s achievements in FY24 not only highlight its operational prowess but also set a solid foundation for future growth and expansion, reinforcing its relevance in the Indian retail ecosystem.
