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Meesho has become India’s first horizontal e-commerce company to generate positive cash flow, marking a major turnaround in a market where profitability has long remained elusive even as new competitive threats emerge.
The SoftBank and Prosus-backed startup, which serves customers in smaller Indian cities and towns, reported positive operating cash flow of Rs 232 crore ($27.6 million) for the fiscal year ending March 2024, with operating revenue increasing 33% to Rs 7,615 crore ( $905.6 million). Its adjusted losses fell by 97% from Rs 1,569 crore to just Rs 53 crore.
Meesho’s growth is still faster than e-commerce growth in India. Bank of America analysts said this week that India’s e-commerce industry growth is expected to decline to 17% in 2024 before accelerating to 20% in 2025. This relatively slow growth is due to the impact of slowing consumption and slowing growth of the apparel industry.
Flipkart’s market revenue increased 21% to $2.12 billion in the fiscal year ended March, it revealed in filings this week. Its losses fell 41% to $280.4 million.
The Indian trade market is simultaneously being reshaped by fast-trading companies in urban cities. Blinkit, Zomato’s express commerce arm, has expanded its network of so-called dark warehouses – warehouses where it stores inventory – and increased its SKUs from 4-5,000 to over 10,000. The platform also introduced new features including installment payment options for purchases above 3,000. INR ($35.7), returns clothes and shoes within 10 minutes, and splits shipments to expand its reach.
Express commerce players — including BlinkIt, Nexus-backed Zepto, Prosus-backed Swiggy’s Instamart and Tata-owned BigBasket — expect to achieve annual sales of about $6 billion this year, according to a TechCrunch analysis.
For established players, the battle also increasingly seems to be about controlling the entire deck. Amazon and Flipkart now handle about 90% of deliveries in-house, while Meesho has launched its own logistics service called Valmo to improve shipping costs. Bank of America says Valmo handles about 35% of all Meesho orders.
This shift comes as competition intensifies for the next 100 million online shoppers in India. Meesho reports that 45% of its customers now come from Tier 4 cities and beyond, with 145 million unique annual transaction users – representing about 10% of India’s population.
“We are also witnessing a significant influx of new e-commerce users, which demonstrates our success in acquiring customers from underserved markets in India,” Mishu said in a statement. “This not only highlights the huge potential of e-commerce in India, but also underscores our vital role in making e-commerce accessible to regions that have historically been ignored.”
Bank of America expects about 120 million new online shoppers to enter the e-commerce market during 2024-2027, and the base is likely to reach 380 million. About 75% of these new users are expected to come from Tier 2/3 cities, representing a distinct group of first-time online shoppers.
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