The exit of Shopee — one of the fastest growing social commerce platforms in India — from the market is being viewed by its rivals as an opportunity to grow profitably. Softbank-backed Meesho is learnt to have told its employees that it is aiming to achieve profitability by December, as it expects a positive cash flow and unit economics.
During a call with employees last Friday, Meesho’s management is learnt to have told staff that “the recent exit of Shopee from the market can be attributed to the current tightening environment and gives us more space.” Shopee exited India late last month, less than six months after it launched in the country, citing “global market uncertainties”.
According to a source, the company has told its employees that going forward, it would have “relentless focus on monetisation” and discover newer ways to increase monetisation. The company will also prioritise improving its capital consumption.
According to Meesho’s annual financial statements, its expenses on IT services more than doubled in FY21 to Rs 89 crore from Rs 37.8 crore in FY20. In the same fiscal, the startup also wrote off loans it had given to vendors and suppliers worth Rs 7 crore. Meesho’s losses ballooned by more than 60 per cent to close to Rs 500 crore in FY21 from Rs 307 crore in FY20.
The Indian Express had earlier reported that Meesho, which has typically so far sold unbranded goods, was looking to partner smaller brands to start offering branded products on its platform. The company has also shifted its focus away from its initial reseller led model and has doubled down on selling directly to consumers, pitting it directly against companies like Amazon and Flipkart. It is learnt that more than 60 per cent of the firm’s transacting customers now come from its direct selling business.
As the company looks for newer streams of monetisation, one of the ways the company is looking to reduce its cash burn is by reducing internal costs. Meesho is learnt to have asked all its employees to practise financial prudence while using the firm’s resources. “Meesho has also asked employees to optimise existing costs by revisiting negotiations with vendors and finding areas of underutilisation,” another source said.
Meesho did not respond to a detailed questionnaire until publication. Flipkart’s social commerce platform Shopsy also did not respond to a query asking how it was looking at the exit of Shopee from India
Meesho is finalising a location and building a compliance framework for its public offering planned in the first half of 2023, as The Indian Express had earlier reported. The Facebook and Softbank-backed firm is contemplating choosing from either a public listing in India or a SPAC-listing in the US.
Management’s message to staff
— During a call with employees last Friday, Meesho’s management is learnt to have told employees that “the recent exit of Shopee from the market can be attributed to the current tightening environment…”
— As per a source, the company has told its employees that going forward, it would have “relentless focus on monetisation”