Meesho became India's first horizontal e-commerce company to generate positive cash flow, disrupting a market that had long remained unprofitable despite the emergence of new competitive threats.
The SoftBank and Prosus-backed startup serves customers in India's smaller cities and towns and has a positive revenue of 232 million rupees ($27.6 million) in the fiscal year ending March 2024. Reported operating cash flow, operating revenue increased by 33% to 761.5 billion rupees ($905.6 million). Adjusted losses fell by 97% from Rs 1,569 billion to just Rs 53 billion.
Meesho's growth still outpaces the surge in e-commerce in India. Analysts at Bank of America said this week that they expect growth in India's e-commerce industry to slow to 17% in 2024 and accelerate to 20% in 2025. This relatively slow growth is due to the impact of weak consumption and slower growth in the apparel industry.
Flipkart's marketplace division said in a filing this week that revenue rose 21% to $2.12 billion in the fiscal year that ended in March. Losses fell 41% to $280.4 million.
India's commerce market is simultaneously being reshaped by urban quick commerce companies. Blinkit, Zomato's quick commerce arm, has expanded its network of so-called dark stores, increasing the number of SKUs from 4-5,000 to over 10,000. The platform also introduced new features to expand its reach, including installment payment options for purchases over 3,000 ₹ ($35.70), 10-minute returns for clothing and footwear, and split shipping.
Quick commerce companies like BlinkIt, Nexus-backed Zepto, Prosus-backed Swiggy's Instamart and Tata-owned BigBasket are projecting annual sales of about $6 billion this year, according to a TechCrunch analysis.
For established players, the battle increasingly looks like it's also about controlling the full stack. While Amazon and Flipkart currently handle around 90% of deliveries in-house, Meesho has launched its own logistics service called Valmo to optimize shipping costs. Bank of America says Balmo handles about 35% of all Meesho orders.
The changes come as competition for India's next billion internet shoppers intensifies. Meesho reports that 45% of its customers currently come from tier 4 and above cities, and it has 145 million unique transaction users annually, which is about 10% of India's population.
“We are seeing a significant influx of new e-commerce users and are proving successful in attracting customers from underserved markets in India,” Meesho said in a statement. “This not only highlights the huge potential of e-commerce in India, but also highlights our important role in making e-commerce available to historically overlooked regions. there is.”
Bank of America projects that approximately 120 million new online shoppers will enter the e-commerce market from 2024 to 2027, bringing the base to 380 million. Approximately 75% of these new users are expected to be from Tier 2/3 cities, representing a distinct group of first-time online shoppers.