SoftBank-backed e-commerce firm Meesho has secured profitability at a consolidated PAT (profit after tax) level on the back of significant cutbacks in customer acquisition, marketing and tech expenditures.
The company claimed to have achieved consolidated PAT-level profitability, encompassing all costs including ESOP, across its divisions and categories, ahead of its anticipated timeline in July, thereby becoming India’s first horizontal e-commerce company to attain this milestone.
Over the past year, Meesho experienced 43 per cent growth in order volumes, culminating in 1 billion orders, consequently driving a 54 per cent surge in revenue. Eighty-five per cent of these orders have originated from returning users. Moreover, the non-fashion categories witnessed growth of over 120 per cent during this period, as every category achieved profitability on a standalone basis. Meesho is primarily known for small-value fashion products among smaller town buyers, so the growth of non-fashion categories showcases a significant diversification of categories.
“Since our inception, we have been driven by a vision to empower millions of small businesses, entrepreneurs and customers, and today’s milestone is a testament to the unwavering dedication of the entire Meesho family. As the first horizontal e-commerce platform to achieve profitability in India, we remain committed to driving sustainable growth, democratising e-commerce for everyone and unlocking the true potential of India's heartland,” Vidit Aatrey, CEO and Founder of Meesho, said.
During the period, customer acquisition cost (CAC) and marketing spends fell 80 per cent (YoY) and tech costs reduced 60 per cent, helping the company improve its unit economics and bolster its operational efficiency. In total, the company served over 140 million unique transacting users in the last 12 months.
In May, the company let go of 15 per cent of its employees, while it had laid off 150 workers around the same time last year. In an email addressed to the employees during the recent layoffs, Aatrey attributed the workforce reductions to errors made in over-hiring in anticipation of future requirements.
As per the company, its run rate soared to an impressive 3.5 million orders per day while its asset light model where it utilised third-party logistics providers for 80 per of orders added to its capital efficiency.
Equity research firm Jefferies said in April that Meesho, which has emerged as the third alternative to the Flipkart-Amazon duopoly, is growing faster than India’s overall online retail market. The brokerage house stated that Meesho’s value-first unbranded assortment targeted at mid-to-low-income households in Tier 2+ cities has led to a GMV growth of 9x to $4.5 billion on the platform over the last two years (CY20-CY22). As per Jefferies’ findings, “65 per cent products on Meesho are cheaper by 20-30 per cent versus other platforms.”
“As of Q4CY22, 50 per cent of Meesho's GMV was from non-apparel categories as against just a 30 per cent share in Q4CY20,” Jefferies had said.
The platform currently holds a 7 per cent share in India’s e-commerce market, and is third biggest player behind Flipkart Group (38 per cent) and Amazon (30 per cent) in terms of GMV split.
In May, US-based Fidelity Investments slashed Meesho’s valuations by almost 10% to $4.4 billion. Fidelity had co-led Meesho’s last funding in 2021, a $570 million Series F transaction, which valued the company at $4.9 billion.
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