Meesho clocks $6.2 billion GMV run rate for FY25; to grow at 26% CAGR through FY31: CLSA

Meesho clocks $6.2 bn GMV run rate, to grow at 26% CAGR till FY31, says CLSA

SoftBank-backed e-commerce startup Meesho has reached a Gross Merchandise Value (GMV) run rate of $6.2 billion for FY25, maintaining its position as India’s third-largest ecommerce platform by GMV. According to a report by CLSA, the company is projected to grow at a compound annual growth rate (CAGR) of 26 percent through FY31.

The brokerage expects Meesho to expand its share of India’s e-commerce market from the current 8.5 percent to 10 percent over the next six years, riding on strong traction in Tier 2 and 3 cities, a capital-light model, and a sharp focus on affordability.

CLSA noted that Meesho’s rise comes at a time when legacy players like Flipkart and Amazon have seen marginal erosion in market share.

Flipkart’s share declined from 33.7 percent in 2020 to 32.1 percent in 2024, while Amazon’s dropped from 30.5 percent to 28.3 percent in the same period. In contrast, Meesho expanded its footprint from low-single digits to 8.9 percent during the same period.

This shift comes amid broader growth in India’s retail e-commerce market, which has grown at a 19 percent CAGR since 2018 to reach $79 billion and is projected to grow at a 21 percent CAGR to $150 billion by 2028.

However, recent data suggests that growth may be moderating—India’s e-retail market, which touched $60 billion in 2024, saw its growth rate slow to 10–12 percent, down from the historical 20+ percent, due to macroeconomic and consumption headwinds, as per a recent Flipkart-Bain report.

Despite the slowdown, Meesho commands a dominant 37 percent share of ecommerce orders in India and is expected to play a key role in deepening ecommerce penetration in non-metro regions. The platform is already averaging 4.9 million orders per day, with over 85 percent of its 187 million annual transacting users coming from Tier 2 and smaller towns.

While Meesho leads on volume, it trails Flipkart and Amazon in GMV due to its limited focus on high-ticket categories such as electronics and smartphones, and a lower mix of premium branded products. Still, it outpaces both players significantly in daily order volumes—36 percent higher than Flipkart and 48 percent more than Amazon.

Tier 2 cities are projected to contribute 63 percent of India’s online shoppers by FY29, up from 57 percent in FY24. GMV from these regions is expected to grow at a 24 percent CAGR, while shipments grow at 35 percent—a favourable backdrop for Meesho’s value-led strategy. The platform’s average order value is modest, at Rs 315–350 (~$3–4), aligned with its affordability focus.

Meesho operates a zero-commission, pure marketplace model with negative working capital, enabling it to scale without investing in inventory or warehouses. It earns revenue primarily through advertising and logistics fees, making Rs 82–85 per order despite not charging sellers a commission.

A key enabler is Meesho’s in-house logistics arm, Valmo. Its decentralised logistics model—where each node of the supply chain is bid out to small players based on capacity—has reduced fulfilment costs from Rs 77 in FY23 to Rs 63, with scope for further savings. If Meesho retains these efficiencies, per-order contribution margins could rise from Rs 17–20 to Rs 62–67, CLSA said.

More than half of the IPO-bound platform’s orders are now being fulfilled via Valmo, up from around 22 percent a year ago, Moneycontrol reported earlier.

With strong capital efficiency—Meesho’s GMV-to-capital ratio stands at 8.9x—and five straight quarters of positive cash flow totalling $118 million, CLSA sees the company as a high-growth, operationally lean contender in India’s ecommerce landscape, well-positioned for a potential IPO.