Glister, Nutrilite, LOC multipurpose house cleaner, Attitude face cream - Does anything ring a bell to you? Hint: You’ve probably used at least one of these products in your lifetime.
Yes, they all are Amway products!
There was a time when almost every middle-class household in India was using Amway products. During the early days, Amway was a direct selling company that used MLM techniques to onboard sellers and make sales using them. We bought their product just because it was being sold by someone who we trusted (friend, neighbor, etc), and not a 3rd party door-to-door salesman.
Tupperware also adopted a similar model. In today’s age where we’re continuously seeing an e-commerce company bloom every day, Amway and Tupperware built a billionaire dollar business just by using the offline method of social selling.
Fast forward to today, where we find Meesho, a mobile-first social commerce company revolutionizing the way we shop and sell online. While they have discarded the MLM scheme, Meesho assists domestic sellers in establishing their own online stores using popular channels such as WhatsApp, Instagram, and Facebook. These sellers can be anyone, from individuals managing WhatsApp or Facebook groups to entrepreneurs with hundreds of potential buyers.
The Predicament of Social Commerce Before Meesho
Imagine this scenario: you walk into your neighborhood Kirana shop and casually tell the shopkeeper that you'll pay him tomorrow when you return for more products. He trusts you because you've been a loyal customer for days, months, or even years, to the point where you've become friends.
Sanjeev Barnwal and Vidit Aatrey, the brilliant minds behind Meesho, recognized the untapped potential in the unorganized retail marketplace and initially conceived "Fashnear" as a hyperlocal platform connecting vendors like Kirana stores and fashion businesses with their prospective customers. However, they soon realized the challenges associated with implementation and logistics, leading them to contemplate a different business model.
Now, imagine that friendly Kirana shop owner adds you to a WhatsApp group where he showcases his latest venture: printed t-shirts. Wouldn't you be inclined to give it a try at least once?
The Meesho Startup Story
Meesho's startup story began during 2015 and 2016, when the founders witnessed the rise of local stores and homemakers creating WhatsApp/Facebook groups to promote their products. Inspired by this phenomenon and armed with extensive research, the founders rebranded Fashnear as "Meri E-shop," later shortened to Meesho.
Meesho addressed one of the biggest obstacles when starting a business: the initial investment. They empowered people to launch their own online businesses without the need to invest time in product research, logistics, stock management, and other complexities.
The Journey to Success
In recognition of their innovative approach, Meesho secured a spot among the three startups selected by Y Combinator, a prestigious startup accelerator. With a seed fund of $120,000, the company began its journey. Today, Meesho boasts around 2 million active sellers and has forged partnerships with 20,000 manufacturers across the country. It has become the most downloaded app on the Play Store for July 2021.
Challenging the Status Quo: Meesho's Unique Offering
When we think of e-commerce in India, Amazon and Flipkart immediately spring to mind as the dominant players. These giants enable customers to buy directly from sellers. However, Meesho follows a reseller model. Here's how it works:
1. A supplier lists a product on the Meesho app, setting a price of Rs. X (let's say 200).
2. You, as a Meesho reseller, share the product details with your WhatsApp groups, adding your desired profit margin. So, you might price it at Rs. X plus your margin (let's say 500).
3. When someone in your group expresses interest in the product, you add your profit margin (in this case, 300) and place the order on Meesho.
4. Meesho takes care of delivering the product to your friend's address and collects the payment.
5. After deducting the supplier's cost of Rs. 200, Meesho applies their delivery and service charges, depositing the remaining amount into your account.
At this point, you might be wondering, "How does Meesho differentiate itself from Amazon or Flipkart?" Besides the reseller model, Meesho primarily targets Tier 2, 3, and 4 cities, expanding its reach beyond urban areas. Even housewives can kickstart their selling journey with Meesho without the need for a GST number—a significant requirement when signing up as a seller on Amazon or Flipkart.
Additionally, Meesho has established a robust logistics network comparable to that of the e-commerce giants. This stands as a major differentiating factor for the company. Despite competing offers such as Shopsy (launched by Flipkart) that provide a zero-commission model, Meesho manages to reduce logistics costs through efficient order volume management, ultimately passing on the savings to suppliers.
That's a tough nut to crack for other competitors.
In the highly competitive landscape of social commerce, Meesho's ability to combine personal connections, affordability, and a strong logistics backbone poses a challenge for its competitors. As the company continues to grow and innovate, it solidifies its position as a game-changer in the marketplace.
Meesho has transformed the way individuals and small businesses approach online selling. By capitalizing on the power of social connections and offering a user-friendly platform, Meesho empowers millions of sellers, particularly in Tier 2, 3, and 4 cities, to kickstart their entrepreneurial journey with minimal investment. As Meesho continues to evolve and expand its offerings, it sets the stage for a dynamic and inclusive social commerce ecosystem, reshaping the way we shop and sell online.
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