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Is Meesho going the Shopee way in India?

Debt, Chinese Revolution, Streaming, OpenAI, and Indian Premium Coffee

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Peeyush Jain & Mohit Garg
May 22, 2024

Salutations, Olio aficionados! 👋

Happy Hump Day and welcome to the 79th edition of Weekly Olio - your trusted source for giggles, wisdom, and a dash of intrigue, courtesy of our tantalizing thought piece (yes, buckle up for Publisher's Parmesan). 🧀

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Throughout history, there have been multiple attempts to break the chain of status. The Chinese tried it with the Communist Revolution and so did Stalin but no matter what actions were taken, status persisted across generations. Through multiple examples from different countries, this thread illustrates that status persists across generations. If someone has gained status, it is very likely they’ll pass on the same habits/traits to their kids and as a result, status manages to persist across generations.

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The Short Read 📝

The company has unveiled a truly stunning demo that has captured the attention of many industry experts and potential customers alike. However, the big question remains: can the final product live?

The question is whether OpenAI can create the universal translator we saw on stage. Large language models learn by studying a lot of content in one language. This is easier for English, the main language of the internet. But a universal translator needs to know every language, and finding enough data in other languages is a big challenge. Even widely spoken languages like Spanish don't have as much content online compared to the number of speakers.

The Long Read 📜

Monami Gogoi is a Senior Assistant Editor for ThePrint, with a focus on local news in India. She covers a wide range of topics, including social issues, cultural events, and regional developments. Monami's articles provide insights into the diverse and dynamic aspects of Indian society and aim to shed light on lesser-known stories and perspectives.

The artisanal and specialty coffee phenomenon isn’t limited to the major metropolitan hubs of Delhi, Mumbai, and Bengaluru. This burgeoning trend has also percolated to cities like Nagpur, Varanasi, and Indore, extending its reach to various other Tier-1 and Tier-2 cities across the country.

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Is Meesho going the Shopee way in India?

A decade ago, in the bustling world of e-commerce, a platform named Meesho came into being. It had a unique charm that attracted orders from the nooks and corners of India's tier-two cities. In fact, last year, 8 out of every 10 orders on Meesho came from these smaller cities and towns. Over time, this unicorn built a dominance that became the envy of its competitors, all thanks to its super-affordable, unbranded products.

Meesho's journey began under the name FASHNEAR in 2015. Initially focused on local fashion goods, the founders, Sanjeev Barnwal and Vidit Aatrey, soon realized the limitations of their business model. They pivoted towards creating a platform that addressed the needs of both suppliers and resellers, leading to the birth of Meesho.

Over time, Meesho became known as an online marketplace for smaller sellers. These sellers could get onto the platform without paying any commission to Meesho. The only charge was for logistics. This unique business model paid off handsomely.

What's drawing investors' interest into Meesho lately is its ability to sustain operating growth. Compared to the previous year, it's managed to significantly cut down its monthly burn rate. But now, Meesho wants to boost its profits. And for it, it's relying on something that is a bit out of character for it.

So, what’s new at Meesho?

Meesho Mall. Through, Meesho Mall, Meesho wants to sell branded products. Not premium brands, but a mix of legacy labels and well-known D2C companies. The point of doing this again goes back to driving up profits. Because unlike the unbranded stuff on the platform, Meesho is charging these brands a commission.

In fact, Meesho wants to increase that commission. But when these brands pay a commission, they expect certain things in return, things which Meesho, with its small business DNA, is not really equipped to handle.

So, how did a platform, whose very USP was selling unbranded products to the budget-conscious buyers in smaller towns and cities, decide to move to selling brands? 

Meesho saw users searching for brands on its platform. So, it knew that there was a certain level of demand. And that is how Meesho Mall came to be. Well, maybe. 🤷‍♀️🤷‍♂️

Or, maybe, like many other things, they just copied Shopee 😛😵😎. Yes, Shopee - the leading online shopping platform in Southeast Asia, based in Singapore, with platforms across the region in countries like Malaysia, Thailand, Indonesia, Vietnam and the Philippines and Taiwan.

If one takes a closer look at the platform, Shopee has a Mall offering since long - an official retail space reserved for brand owners and authorised distributors.

Methods aside, let’s come back to the motivation behind Meesho Mall 😅

The company wants Meesho Mall to drive a larger share of its profits because brands can be monetised more effectively compared to smaller businesses. This is why Meesho Mall is its number one bet for long-term, sustained growth.

In 2022, when Meesho Mall was just about getting started, Meesho decided its aim for the first six months was going to be a 10% share of branded products in its total sales. That didn't quite go according to plan. As of now, they've managed to reach about 5% of that number, which goes higher during discounting periods and festival sales. But Meesho is not giving up just yet.

Apart from charging the brands a commission fee, Meesho also has other plans to drive up its revenue. One such plan is advertising. This is an all-new opportunity for Meesho. Unbranded, smaller sellers in general spend as little as possible on ads. But brands are ready to scale it with volumes because they want more market share.

However, the journey is not as easy as it sounds.

Earlier, Meesho Mall saw traction because of its comparatively lower commissions. But Meesho's push for higher commissions would eat into the already thin contribution margins of the Brands. Moreover, Meesho's analytics and data visibility are not nearly as good as platforms like Amazon and Flipkart. This lack of transparency is not going to be of any help if Meesho genuinely wants to ramp up its ad revenue from these brands.

Despite all of this, Meesho Mall will still appeal to brands. Most brands want to be present on every platform to optimise visibility and presence. Plus, Meesho is a great place for newer, upcoming brands who do not have the money to make huge investments and hire an entire sales team to expand their reach to smaller towns and cities. So while Meesho Mall may work out well for the company in the future, until then, Meesho has a lot of groundwork to do. The unfolding story of Meesho continues, and we are here to narrate it to you, one chapter at a time.

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