Meesho Business Model: How does Meesho Earn Money?

Meesho, established in 2015 by Vidit Aatrey and Sanjeev Barnwal, has emerged as a pioneering force in India’s e-commerce landscape. Initially conceived as a platform to empower small businesses and individual entrepreneurs, particularly women, Meesho has evolved into a comprehensive online marketplace. Its unique business model integrates elements of social commerce and traditional e-commerce, creating diverse revenue streams that have fueled its rapid growth.

Commission from Sellers

A primary revenue source for Meesho is the commission charged to sellers for each transaction facilitated through its platform. This commission typically ranges from 10% to 20% of the product’s sale price, depending on the category and sales volume. By acting as an intermediary between suppliers and resellers, Meesho benefits from the high transaction volume occurring daily on its platform.

Shipping and Logistics Fees

Meesho manages the logistics and shipping for all transactions on its platform. While resellers are not directly burdened with shipping costs, Meesho charges a shipping fee to the buyer, which is added to the total order value. The company earns a margin by negotiating favorable rates with logistics providers and efficiently managing delivery services.

Value-Added Services for Sellers

To enhance visibility and sales potential, Meesho offers value-added services to sellers, including promoted listings, advertising opportunities, and analytics tools. Sellers pay for these services to gain better exposure to potential resellers and customers, providing Meesho with an additional revenue stream beyond standard commissions.

Subscription Plans

Meesho has introduced subscription plans for sellers seeking access to premium features on the platform. These plans offer benefits such as priority customer support, enhanced visibility, and exclusive access to new product categories. Sellers pay recurring fees for these subscriptions, adding a layer of consistent revenue for Meesho.

Penalties and Compliance Fees

To maintain service quality and adherence to platform policies, Meesho imposes penalties on sellers for specific infractions. For instance, if a seller opts for “Next Day Delivery” but fails to dispatch the product on time, a penalty of 2.5% of the order value per day is levied. Additionally, sellers may incur charges for order cancellations, late dispatches, or other breaches of the supplier agreement. These penalties serve both as a deterrent against non-compliance and as a supplementary revenue source for Meesho.

Data Analytics and Insights

Leveraging the vast amount of data generated on its platform, Meesho provides sellers with analytics and insights to optimize their product offerings and marketing strategies. Access to detailed consumer behavior data and sales trends enables sellers to make informed decisions, and Meesho monetizes this service by charging for advanced analytics features.

Partnerships and Affiliate Programs

Beyond direct sales, Meesho engages in affiliate marketing and partnership programs. The platform collaborates with other brands and service providers to promote their products and services to Meesho’s user base. In return, Meesho earns commissions or referral fees for every successful sale or lead generated through these partnerships, diversifying its revenue streams.

Financial Performance and Growth

Meesho’s financial trajectory reflects its innovative business model and expanding market presence. The company’s annual revenue has seen a meteoric rise, from approximately $700,000 in 2018 to $689 million in 2023. While Meesho has reported net losses each year since 2018, 2023 marked the first time it reduced its annual loss, indicating a move towards profitability. The platform’s user base has also expanded significantly, with monthly active users growing from 40 million in 2020 to 120 million in 2022.

Conclusion

Meesho’s multifaceted business model, encompassing commissions, logistics fees, value-added services, subscriptions, penalties, data analytics, and partnerships, has established it as a formidable player in India’s e-commerce sector. By continually adapting to market dynamics and leveraging its unique position in social commerce, Meesho has created a sustainable revenue framework that supports its ongoing growth and path towards profitability.