Meesho Business Model: How Does It Work & Make Money?

Meesho Business Model

With the evolution of the internet, there has been a significant increase in the digitalization of the markets. The online reselling platforms enable local and small business individuals to expand their businesses. One such platform is Meesho and here we are to uncover the Meesho business model. It enables the buying and selling of a wide range of products including apparel, accessories, utensils, cosmetics, furniture, electronics, etc.

Meesho Business Model

Meesho provides opportunities for individuals to initiate and expand their businesses via social media channels like Whatsapp, Facebook, Instagram, and many more.

Do you know that Meesho has become one of the top online reselling platforms within seven years of its establishment? You must be wondering how it became successful within a short time. Well, the secret behind this is its business strategy. The unique and effective Meesho business model is the primary reason for its success. To uncover this, we’ll be covering the below topics:

  • Working Strategy
  • Revenue Sources
  • Marketing Strategies

Working Strategy 

Before jumping directly into the business model, it is necessary to have a basic understanding of the workings of Meesho.

In simple words, Meesho is an e-commerce platform that works on a B2B model. The Acronym “B2B” stands for Business to Business. Exchange of services occurs between two businesses rather than between a business and a customer.

It acts as a bridge between manufacturers and resellers. It connects them by providing a suitable platform.

The following steps describe the workflow of Meesho:

Step 1: The manufacturers list their commodities in Meesho app. They are known as “Sellers.” 

Step 2: The merchants or the users can choose any of the products mentioned in the list of Meesho apps to sell those products to the customers using social media apps like WhatsApp, Facebook, Instagram, Telegram, etc. These merchants are known as “resellers.” Here, the resellers earn commissions with zero investments. 

Step 3: A member of the reseller’s social network expresses his/her interest in purchasing the product. Then, the customer shares the contact and address details with the reseller.

Step 4: The reseller places the order on the Meesho app by adding the profit margin.

Step 5: This is the final step where Meesho plays a crucial role. The Meesho logistic partners collect pack and ship the product from the seller to the hands of the buyer. The buyer can pay Meesho either with digital payment systems (debit cards, credit cards, or UPI) or COD (Cash on Delivery). Once, the selling process is completed, Meesho provides a definite set of commissions to the reseller.

So, basically in Meesho, the exchange of goods takes place between the sellers and the resellers. It is the reseller who sells the products to the customers, not the seller or manufacturer. Meesho logistic partners take the responsibility of packaging and delivering products.

Revenue Sources: How Meesho make money?

A business is termed as “successful” only when it generates a high revenue and income. Meesho works on the enterprise version of industrial e-trade companies. It drives its revenues majorly from the following four sources-

  • Commission: Meesho charges a definite set of commissions on the product sellers. It means that the manufacturers (sellers) need to pay 10% to 20% commission when their products are sold by the reseller on the Meesho platform. This is their primary source of income.
  • Logistics & Shipping Fees: Meesho provides logistics services to the suppliers by charging fees, but it is striving considerably to lower the costs of logistics to boost the profits of the sellers and resellers. This fee is based on weights of the package and delivery location.
  • Advertisements: This is another significant source of income for Meesho. It receives fees from the vendors and merchants who advertise and promote its products in the network of resellers and buyers on the Meesho app and website.
  • Data: The data is a kind of new oil that provides considerable revenue for Meesho. However, it never violates any privacy policy. 
  • Funding: Within the course of multiple debt financing rounds, Meesho received over USD 1.1 billion from the investors. Soon, it will be ready for its public listing.

Marketing Strategies

A view of Meesho Office - Meesho Working Strategy

Do you know why Meesho rose as a shining star among contemporary e-commerce reselling websites? It is due to their efficient marketing strategies which include the following-

  • Target Marketing– It refers to targeting those people who are more likely to use the services or products of the company. Usually, Meesho runs a targeted campaign for women because one of its main objectives is to provide business opportunities to women without any need to invest a hefty sum of money.
  • Social Media Marketing– social media is considered an effective way to connect with the audience. One of the unique marketing strategies used by Meesho is the “Meme Wave.” It promotes alluring deals and discount offers with eye-catching dialogues and images in the memes. It also uses ad campaigns on Facebook and other social media to gain more viewers and users. The users land directly on the homepage of the Meesho website whenever they click the advertisement.
  • Television Commercials– Ever since the development of television, well-scripted and emotional commercials have been effective to draw a significant viewership. They created the #MyStoreMyStory television commercial campaign to empower homemakers and women. The motto of these campaigns is to encourage women (housewives) to become Meesho entrepreneurs.
  • Lowering the Commission– This type of marketing involves reducing the commission rate of the suppliers on the sale of their goods. This marketing technique attracted various small businesses. It was named #SabseKamCommission.

Note: Do you know, that recently Amazon launched “Bazaar” to engulf Meesho’s target audience? Not only it will increase the competition in the but also engulf a major portion of Meesho’s customer base in tier 1 and tier 2 cities. We have covered it in detail here- Meesho vs Amazon’s Bazaar. You can go through it for detailed information.

Final Words

In short, you need to contact a Meesho seller who will buy the product from the Meesho platform and will resell it to you. That’s how Meesho business model works. You can say that it is a hybridization of the conventional e-commerce model with social selling and dropshipping.

Meesho has received over 750 percent increase in its users over the prior years. With its brilliant business model, it has become one of the most successful social e-commerce companies. After all, it has successfully democratized internet commerce for everyone where small companies can prosper in the digital world. 

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Published By: Supti Nandi
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