Social media, mobile tech & communication | Vidit Aatrey (27), Sanjeev Barnwal (28), Co-founders, Meesho: Meesho—short for “meri shop”—helps merchants sell more efficiently through social media. About 1,000 sellers and 30,000 resellers are listed on the platform.
Social commerce firm Meesho became India’s fifth unicorn of 2021- firms valued at a billion dollars or more, when it raised $300 million led by SoftBank Vision Fund to be valued at $2 billion. It was last valued at $600 million in August 2019.
Meesho enables resellers- primarily women- to sell clothes, bedsheets, accessories and more via social platforms such as WhatsApp and Instagram. In an interview with Moneycontrol, co-founder and CEO Vidit Aatrey spoke about the company’s plans, decision to pull back from foreign markets, and reacting to the pandemic. Edited excerpts
What was the past year like? When the pandemic hit, how did you react to it? What were the short-term implications?
Like all e-commerce, for that particular hard lockdown that India had for 2-3 months, we had to shut shop. There was no movement happening because all shipments were banned. At that time, the biggest focus we had was how do we make sure that our entrepreneurs are able to retain income because they belong to income segments that were most impacted by Covid. We started a lot of new experiments around categories like grocery, started giving them digital products, created a way for them to get short-term loans from us so they can support their family. The other thing we did was that a lot of frontline workers wanted masks. We asked many who had sewing machines to make masks and told them we will buy them. The core objective was how we can support entrepreneurs to make some income. We started to focus on a lot of this. Our grocery experiment did very well and we will continue to invest in that going forward
Can you give us some context about your revenue?
Like all e-commerce marketplaces, our revenue grows in line with GMV (Gross Merchandise Value) and we don't share a specific number. Over the last two-three quarters, we have also launched a new advertising revenue stream. A lot of small businesses can spend more for discovery in the app and pay for that through us and we have seen a great uptick for that. The focus right now is to go out and enable more and more smaller businesses, capture a larger share of their sales. Revenue will follow.
In the reseller led model, especially for fashion, sales returns are said to be as high as 30-40 percent. Is this an impediment to business?
We run a pure marketplace business, where no inventory is on our books. If a product gets returned by a customer, the cost of return is always borne by the supplier. High or low returns do not affect us. Even in categories with high return rates, our returns are less than 15 percent. We have leveraged women entrepreneurs and their strong influencer community. They are able to set the right expectations. When people are buying from people they trust, they tend to return much less. Even though we are playing in an unbranded category where consistency and assurance tends to be lower than branded category. But, even then our number tends to be lower.
We also understand you’re exiting your South East Asia business. So are you consolidating operations and narrowing focus to India?
We have seen massive growth in India over the last year. 18 months ago we started to think about international operations but growth in the last year has forced us to focus all our resources, everything that we have to grow in India and capture this opportunity, to focus on one thing that we can do really well. The market opportunity in India is very large when compared to any other emerging market. We took a conscious call of focussing everything here. For the next few years we are going to focus everything only on India. It could be different categories or geographies but it will be only within India.
Our vision is to enable 100 million small businesses to come online. We will do it category by category, format by format
We are platform agnostic. We have integrations with anything possible, such as Telegram and other apps. We want to be there wherever people can build communities. So the WhatsApp policy doesn’t affect us at all. We will follow where the user goes.
With the pandemic’s second wave in India, and lockdowns already in some places, are you preparing for a lockdown again? Do you have a plan?
Right now a lot of these details are not clear. We don't know if this lockdown will be as hard hitting as last year. Based on our last experience, we have a playbook as we go back to that old time. But I am hoping that the government will realize even if we go into a lockdown, people should get access to products and services; livelihoods are connected. I am not sure if it will have similar rules but based on last year we have a playbook in case we go back to strict, hard lockdown. I don't think anyone this time will be as ill-prepared as last year because we were all thinking all our feet.
It is also interesting that Shunwei Capital participated in this round, given that they have been exiting other investments in India (Koo, Krazybee) amid geopolitical tension. Any reason?
Shunwei has invested because they continue to be bullish on the company. For us, it was not about Chinese or non Chinese investors. Every existing investor has the right to participate pro rata in the next round. Shunwei is an existing investor and they have exercised their right to invest this round. And we are perfectly okay with it.
This is now your Series E funding. You are less than six years old but will you decide on an IPO at some stage?
We definitely have the dream of doing this at some stage but it is not going to happen anytime soon. There is still a long way to go in our growth journey. It won't happen this next year or next year, we are still very early in thinking about an IPO.
Do you see an opportunity for acquisitions - vertical or horizontal?
We keep evaluating and exploring inorganic growth opportunities. We just haven't found something that has strong synergy and alignment. We haven't found those yet but we are always on the lookout, we keep evaluating these opportunities
What is the biggest challenge today?
There are lots of challenges. Technology has not been built keeping small businesses in mind, no platform has enabled them to get the kind of tools. We need to understand what kind of tech will enable value proposition for small businesses, a lot of policies don't enable small businesses. A lot of things structurally that we need to solve end to end. India has one of the highest percentages of small businesses contributing to the economy. If we do that, a lot of them will come online and get a higher share of online commerce in India.