Meesho, an e-commerce startup, has risen through the ranks to become India's third-largest online retail platform by gross merchandise value or GMV. Backed by its sharp focus on small towns, low-cost sellers, and a culturally aligned tech model, the company is now preparing for a potential initial public offering or IPO.

According to a recent CLSA report, Meesho reached a GMV run rate of 6 point 2 billion US dollars for FY25. The brokerage firm projects Meesho's market share in Indian e-commerce will rise from 8 point 5 percent to 10 percent in the next six years. In contrast, rivals like Amazon and Flipkart are expected to see marginal declines.

Unique approach sets Meesho apart

Founded in 2015, Meesho began its journey as Fashnear, a hyperlocal fashion discovery app. But its real breakthrough came when it pivoted to serve unbranded goods markets and Tier 2 and Tier 3 towns. This move unlocked a massive customer base of price-sensitive and first-time Internet shoppers.

The company's strategy has yielded results. Today, Meesho boasts:

• Over 187 million annual transacting users

• Annual order volume of 1 point 3 billion

• Achieved profitability, a rare milestone in horizontal e-commerce

Seller-first and low-cost model

A major factor behind Meesho's success is its seller-first model. In 2021, Meesho removed commission fees entirely, becoming the lowest-cost platform for online sellers in India. This policy attracted more than 4 lakh active transacting sellers.

Meesho also built a lightweight mobile app optimised for low-end smartphones and slow data networks, with support for multiple Indian languages. This helped the platform penetrate rural and semi-urban markets more effectively than its larger competitors.

According to Lavanya Ashok of Trifecta Capital, which backs Meesho, the company’s AI-driven cataloguing, personalised shopping interface, and vernacular support have been instrumental in onboarding new buyers and building long-term seller trust.

Logistics innovation through Valmo

To support its low-cost operations, Meesho has developed its own delivery arm, Valmo. This logistics network collaborates with more than 6000 regional partners to deliver to over 15000 pin codes across India. Currently, Valmo handles over 50 percent of Meesho's total deliveries.

Unlike startups that build new supply chains from scratch, Meesho has chosen to enhance existing logistics networks, which has allowed it to maintain lower customer acquisition costs. This model, according to investors like Arjun Malhotra of Good Capital, is not only capital-efficient but also culturally aligned with Indian commerce.

Strong financial performance

Meesho's focus on discipline and efficient execution is now reflected in its financials:

• In FY24, Meesho reported free cash flow of rupees 197 crore

• Adjusted losses declined by 97 percent compared to the previous financial year

• Categories like home and kitchen and beauty and personal care emerged as key growth drivers

This marks one of the few cases where an e-commerce platform has scaled significantly without burning massive amounts of capital.

Vast untapped market still remains

Despite the current scale, Meesho’s potential is far from exhausted. India has over 63 million micro small and medium enterprises or MSMEs, but only 5 percent of them are fully digitised. This opens up a massive market for platforms that offer low-cost and easy-to-use digital tools.

Investor Arjun Malhotra noted that maintaining trust at scale is one of Meesho’s biggest achievements, which also serves as a defensive moat in an increasingly competitive market.

Market tailwinds support Meesho's growth

The broader market conditions are favourable too. According to Wazir Advisors, India's value retail market—excluding food and groceries—is expected to grow from 111 billion dollars in FY23 to 170 billion dollars in FY26.

Meanwhile, Bain and Company reported earlier this year that hyper-value commerce has grown from 5 percent of India's e-retail GMV in 2021 to over 12 percent in 2024. Meesho is well positioned to ride this wave, given its focus on affordability and regional relevance.

IPO prospects and future vision

With a solid track record, positive unit economics, and growing investor confidence, Meesho appears ready for a stock market debut. While the company has not confirmed a timeline, market analysts believe that its next phase of expansion could be funded through public capital.

If successful, Meesho could become a poster child for how inclusive design, rural focus, and cost efficiency can build a large-scale business in India.

The Upcoming IPOs in this week and coming weeks are Ganga Bath Fittings, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are 3B Films

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