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Global inspirations: social commerce giant Meesho creating jobs at scale

Feb 2, 2022 | Lessons Learned (the Hard Way)

Author: Tracy Mwaura

In this article, we look to India for global inspiration in social commerce. We explore how this e-commerce platform has created income for over 1 million people in India. As a very timely note for this article, Ghanaian social commerce platform (the ‘Meesho for Africa’) was just accepted into Y Combinator’s Winter batch (more here).

A great deal of people dream of venturing into entrepreneurship. However, many of these dreamers never take the first step towards achieving these dreams because of the number one discouraging factor: financial limitations. 

Sufficient capital is critical for entrepreneurship. Capital plays a huge factor enabling first time entrepreneurs to: 

    • set up stores
    • buy inventory
    • have enough funds to allow the initial grace period before their businesses break even. 

But what if none of those factors were limiting? Two Indian Institute of Technology graduates, Vidit Aatrey and Sanjeev Barnwal, created a social e-commerce platform, Meesho, to do just that. The duo have, since 2015, worked towards enabling anyone to start an online business without an investment.

This article aims to draw inspiration from Meesho’s business model and how they’ve worked to create income for over 1 million low income people in India.

What is Meesho?

Meesho is an Indian social e-commerce company with its HQ in Bangalore. Prior to Meesho’s conception, the founders worked at Inmobi, driving real connections between brands and consumers by creating new pathways for brands to identify, engage and acquire new customers. These skills would later come in handy while establishing Meesho as a trusted brand with their targeted audience.

A few years in, the two took a leap of faith and set out on their own path for a startup idea they were still uncertain about. What they were sure of however was that they wanted to work on something challenging enough that they could relate to & connect with. They found two similarities between themselves:

    •  They were both from a middle class background and 
    • They both had a history of working in retail. 

They agreed that bringing the unstructured chaotic Indian retail market online would keep them interested for a long time.

The first attempt

Vidit and Sanjeev are an ideal example of the saying “the closer you are to the problem, the closer you are to the solution.’’ The inquisitive pair went around shops in Bangalore asking what problems they could help the shopkeepers solve in reaching their local customer audience. 

This initial problem scouting led to the creation of their first prototype: Fashnear (short for fashion nearby) where customers could have online access to nearby shops and choose 3 items to be delivered. They’d then try them out, pick out their preferred items and send the rest back. In a span of about 3 months, they realized that Fashnear wasn’t working out, mainly because of a lack of variety among other limiting factors. Undeterred, they went back to their shopkeepers to learn more.

Giving It a Second Go

The founders acknowledged that timing was one of the success factors behind Meesho.

The second time around Vidit & Sanjeev went back to the field, they fully immersed themselves in the shopkeeping experience. They sat to observe the shopkeepers in their shops, observed how they ran their businesses, had lunch with them and even played with their kids!

Serendipitously, this was the same time Whatsapp blew up as the most popular messaging application. In this second field study immersion, Vidit and Sanjeev discovered how shopkeepers utilized the platform to promote their businesses. 

A customer would make a purchase and the shopkeepers would ask for their contacts to later add them to a Whatsapp group. The shopkeepers would add their frequent customers to a Whatsapp group, take photos of new product inventory, and then send them to the groups where customers could then reserve certain items, pay and have them delivered to their doorsteps.

The duo found this remarketing and retargeting of customers through Whatsapp fascinating and asked themselves how they could help more businesses adapt this approach. They observed this technique in a couple more shops, noticed its effectiveness, nitpicked at it, and found these two weaknesses: 

    • Booking of items and tracking the purchased and non purchased ones was a hassle.
    • There was a lack of effective payment options as online payments weren’t established in India at the time.

Without reinventing the wheel, Vidit and Sanjeev took up this idea and ran with it, building an app that solved these two loopholes, creating version one of Meesho. They went back to the market, recommending Meesho to the shopkeepers in Bangalore for them to use to run their Whatsapp transactions. 

However, after some time, they noticed that even though they did retain some users, Meesho’s reception wasn’t as strong as they’d initially expected. So they went back to the field. Again. .

Third time’s a charm

On their third iteration round, they learnt that their original value proposition – increasing productivity – wasn’t of high priority value to the shopkeepers. Meesho’s first version wasn’t catering to what mattered to the shopkeepers most: Meesho didn’t guarantee them any new customers or reduce their costs in any way. 

Despite this unforeseen setback, when they went back to their data to see who was mostly using Meesho, they discovered that they were primarily serving a market they had very little insight to: women entrepreneurs. After reaching out to find out why and what they were using Meesho for, they found out that these women were resellers, using the same concept Vidit and Sanjeev had intended for the shopkeepers – running their virtual ‘Whatsapp shops’. 

It’s very common for ambitious women in India to start small businesses while at home for their upkeep. Some sell food, some tutor. Whatever choice of trade they chose, they venture into to keep busy, feel respected and proud to make a contribution to society. Vidit personally visited the women in their houses to better understand how their app was being utilised by these entrepreneurial women in Bangalore. Most of them were educated, ambitious women who after getting married (due to traditional pressures or otherwise) became housewives but still craved financial autonomy. 

Meesho gave these women what they needed: An avenue to independently start businesses without the hassle of having to raise capital or have an existing physical shop. Through Meesho, these women were able to fulfill their dreams despite their lack of access to capital.

Here’s how it worked: The women would contact wholesale suppliers on Meesho, curate images of items available, post on Whatsapp channels for their potential buyers and sell without the physical handling of any inventory. Several years and better systems down the line, Meesho is making online shopping accessible in several towns across India in smaller regional markets where other e-commerce giants still haven’t penetrated.

How does the current Meesho model work and how do they make money?

Meesho’s commission earned model is just like the other e-commerce platforms like Amazon. They make money from the commissions charged from the suppliers. According to an interview with the Business Standard, commissions vary between 10 and 20 percent of the product value.

To make money from Meesho, resellers have to share products listed on Meesho on their Whatsapp groups and Facebook pages, earning a commission for every sale made. They can add their commission and shipping charges above the price and when an order gets confirmed, they’ll get notified of the purchase and the margin would then be credited to their bank accounts.

Meesho has reached the milestone of $1 Billion Valuation in just five years by enabling housewives, young mothers, aspiring entrepreneurs, students, teachers and even retired people to launch, build, and promote their online business by creating an alternate distribution channel.

With their recent partnership with Softbank Vision fund who’ve helped them raise $300 Million, they’re currently on a mission to enable 100 million small businesses to succeed online. “We believe that India’s economy will truly be digitised when small businesses become successful online and we want to enable that revolution,” says Cofounder & CEO, Vidit Aatrey. 

While we have already seen the open-armed reception of online shopping through Whatsapp business accounts & Instagram shops in the African market, we hope to explore similar, more diverse trends being applied within the continent and until then continue to draw inspiration from unicorns like Meesho. 

Read more of our global Inspiration pieces here.

The author is a youth employment and jobtech researcher and content developer with Education Design Unlimited


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