31 August, 2023
Last updated on 28 October, 2023
Written by Content Team
Meesho Business Model and How Does It Work
Uncover the groundbreaking Meesho business model, an e-commerce pioneer that enables individuals to launch their own ventures by reselling products through social networks.
Meesho is a social commerce platform that connects businesses with customers using social media platforms like WhatsApp, Facebook, and Instagram. It was established in 2015 by Vidit Aatrey and Sanjeev Barnwal. Has its headquarters in Bangalore, India.
The Meesho platform enables businesses to build stores and sell products to social media followers. The platform offers a range of tools and services, including product sourcing, inventory management, shipping, and payments.
The Meesho Business Model holds importance as it provides a user-friendly way for small businesses to establish an online presence. Moreover, it allows businesses to access a customer base by leveraging the influence of media.
Meesho has experienced growth in the years. As of 2022, the company's gross merchandise value (GMV) reached $4.5 billion. Currently positioned as one of India's leading social commerce platforms, Meesho is anticipated to continue its expansion trajectory in the future.
Meesho operates using a dropshipping model, wherein the company has no inventory. Instead, it serves as a bridge between suppliers and resellers, who sell the products to customers. Meesho earns commissions from both suppliers and resellers.
Connecting Suppliers and Resellers
Through its platform, Meesho facilitates the connection between suppliers and resellers. The platform enables suppliers to showcase their products while allowing resellers to browse through and choose which products they want to sell. Additionally, Meesho offers tools and services like product sourcing, inventory management, and shipping assistance to help suppliers and resellers efficiently run their businesses.
Role of Social Commerce and Reselling
Meesho functions as a social commerce platform by leveraging media platforms such as WhatsApp, Facebook, and Instagram to connect buyers with sellers. Resellers have the opportunity to promote products on these platforms, thereby reaching an audience. This aspect provides advantages for businesses as they can expand their reach without any initial investments.
Platforms Approach to Order Fulfillment
A crucial component of Meesho business model lies in its approach toward order fulfillment. The company collaborates with third-party logistics providers for product delivery services to customers. By doing so, Meesho concentrates on its core competency of connecting suppliers with resellers while leaving the logistics aspect in its hands.
Let's discuss the revenue generation strategy of Meesho. Meesho generates revenue through channels that include:
1. Earning Commissions from Suppliers:
Meesho charges a commission to suppliers who list their products on the platform. The commission rate may vary based on the category of the product.
2. Earning Commissions from Resellers:
Meesho charges a commission to resellers for selling products on the platform. The commission rate typically ranges between 10-20% of the product price.
3. Advertising Opportunities:
Meesho offers advertising space on its platform to brands and businesses generating revenue.
4. Shipping Fees:
Customers who make purchases on the Meesho platform are charged shipping fees.
Commission and Revenue Structure
The commission and revenue structure adopted by Meesho is as follows:
1. Suppliers: Suppliers are charged a commission ranging from 10% to 25% of the product price.
2. Resellers: Resellers are charged a commission ranging from 10% to 20% of the product price.
3. Customers: Customers are required to pay shipping fees, usually amounting to Rs. 100-200.
Employed Monetization Strategies
Meesho implements monetization strategies, which include:
1. In-app Advertising:
Meesho offers advertising space within its app to brands and businesses, serving as a source of revenue for the company.
2. Subscription Fees:
Meesho provides a subscription service that grants users access to features, including the opportunity to sell a larger variety of products and increase their visibility.
3. Monetizing data:
Meesho gathers information about its users and vendors, subsequently selling to businesses. This has become a source of income for Meesho.
As Meesho looks ahead, it encounters challenges. These include:
Meesho faces competition from social commerce platforms like Flipkart, Shopsy, and Amazon's Seller Central.
The Indian government is contemplating regulations that may affect the social commerce industry.
Meesho is also grappling with the issue of fraud, as some resellers have been caught selling products.
However, despite these hurdles, Meesho is in a position for growth. The company boasts a team, an user base, and a proven business model. Additionally, Meesho is expanding into markets like Southeast Asia and Latin America.
Challenges in the Social Commerce Landscape
With the expansion of the social commerce industry comes an amplified risk of fraud. Instances of resellers selling products or consumers falling victim to scams have emerged.
Governments are starting to impose regulations on the social commerce sector. This might pose challenges for commerce platforms in terms of their operations.
The logistics industry is still in the process of adapting to meet the requirements of social commerce platforms. As a result, there can be shipping and delivery delays.
Meesho is a social commerce platform that is making waves in the industry. The company is experiencing growth. Has the potential to become a major player in e-commerce. However, it faces challenges, such as competition from platforms in social commerce and the need to enhance its operations.
Nevertheless, Meesho is definitely worth keeping an eye on. If you're a business owner looking to transition into online product selling or struggling to establish a presence, tryGonukkad
Q. How does Meesho make money?
A. Meesho earns revenue by taking a percentage of the sales made by resellers through their platform.
Q. What types of products can be sold on Meesho?
A. Meesho offers a wide range of products, including fashion, accessories, beauty products, home décor, and more.
Q. Do resellers need to hold inventory with Meesho?
A. No, resellers on Meesho do not need to hold inventory. They can promote products and place orders on behalf of customers only when they receive an order.
Q. Is Meesho limited to a specific geographic area?
A. Meesho initially focused on India but expanded its reach to various regions, allowing resellers from different parts of the country to participate.
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