Meesho has become India’s first horizontal e-commerce company to generate positive cash flow, marking a significant shift in a market where profitability has long been elusive even as new competitive threats emerge.
The SoftBank and Prosus-backed startup, which serves customers in smaller cities and towns in India, reported positive operating cash flow of 232 million rupees ($27.6 million) for the fiscal year ending March 2024. It rose 33% to 7.615 billion rupees. ($905.6 million). Adjusted losses decreased by 97% from ₹1,569 crores to ₹53 crores.
Meesho’s growth is still faster than the surge in e-commerce in India. India’s e-commerce industry growth is expected to slow to 17% in 2024 and accelerate to 20% in 2025, according to Bank of America analysts this week. This relatively slow growth is due to the impact of slowing consumption and slowing growth in the apparel industry.
Flipkart’s marketplace unit posted a 21% rise in revenue to $2.12 billion in the fiscal year that ended in March, the company revealed in a filing this week. Losses fell 41% to $280.4 million.
The Indian commerce market is being simultaneously reshaped by urban quick commerce companies. Blinkit, Zomato’s quick commerce arm, has expanded its network of so-called dark stores (warehouses that store inventory) and increased SKUs from 4-5,000 to over 10,000. The platform has also expanded its reach by introducing new features, including installment payment options for purchases over ₹3,000 ($35.7), 10-minute returns for clothing and shoes, split shipping, and more.
Fast commerce players, including BlinkIt, Nexus-backed Zepto, Prosus-backed Swiggy’s Instamart and Tata-owned BigBasket, are expected to generate annual revenue of about $6 billion this year, according to a TechCrunch analysis.
For established players, combat increasingly appears to be about controlling the entire stack. Amazon and Flipkart currently handle about 90% of their deliveries in-house, and Meesho has launched its own logistics service called Valmo to optimize delivery costs. According to Bank of America, Valmo processes about 35% of all Meesho orders.
The change comes as competition for India’s next 100 million internet shoppers increases. Meesho reports that 45% of its current customers are from tier-4 cities and above, and it has 145 million unique transacting users per year, which is about 10% of India’s population.
“We are also seeing a significant influx of new e-commerce users, demonstrating our success in winning over customers in underserved markets in India,” Meesho said in a statement. “This not only highlights the enormous potential of e-commerce in India, but also our important role in making e-commerce accessible to historically overlooked regions.”
Bank of America projects that approximately 120 million new online shoppers will enter the e-commerce market between 2024-27, bringing the base to 380 million. Approximately 75% of these new users are expected to be from Tier 2/3 cities, representing a distinct segment of first-time online shoppers.
