Meesho Is Turning Housewives Into WhatsApp Entrepreneurs
Walmart and Amazon face an unlikely challenger in Indian housewives.
Lavi Srivastava, 32, was battling depression after a personal loss and wanted to keep herself engaged. She stumbled upon an advertisement on YouTube to start an online retail business with zero investment. Finding it too good to be true, the Lucknow-based housewife ordered products to make sure it wasn’t a fraud. “I wanted to check if it works, the quality of products, delivery and return policy.”
That was May last year. Today, she sells everything from trendy handbags for women, silk sarees, smartwatches and even toilet cleaner on WhatsApp. That earned her Rs 1.24 lakh in bonuses by surpassing weekly sales target alone.
She is one of the nearly 20 lakh sellers on Meesho that allows retailing through social media platforms without the hassle of managing or investing in inventory. Nearly 90 percent of students, homemakers and business owners who are members of the four-year-old venture are women. Much like Amway or Tupperware, it provides catalogues of products. But these are mostly low-cost, unbranded items sourced from 20,000 suppliers in India and China. The company takes care of payment, deliveries, returns, and resellers earn commission. WhatsApp, with more than 400 million users in India, is the preferred choice for most.
“We are bringing offline boutiques, typically run by housewives, online and encouraging more women to become entrepreneurs,” Vidit Aatrey, founder & chief executive officer at Bengaluru-based Meesho, said over the phone. Unlike e-commerce marketplaces where consumers are bombarded with a wide range of selection from unknown merchants, he said, individuals are the face of the commerce on Meesho.
The startup, which just raised $125 million from investors including Facebook Inc, and its peers like GlowRood and Shop101 are now part of the second wave of e-commerce in the country with cheap data and half a billion smartphones. That comes when Walmart-owned Flipkart and Amazon battle it out, and Asia’s richest man Mukesh Ambani’s hybrid plan poses a threat. Still, online retail has barely reached beyond large cities and, according to Forrester Research, it contributes less than 4 percent to India’s $860-billion market in 2018.
Social commerce platforms could gain from a large number of first-time online buyers from smaller cities and towns. According to a report by EY & IVCA, rural e-tailing alone presents a $10-12 billion opportunity in the next four years.
Nearly 18 lakh women sold beauty, fashion and lifestyle products worth $8 billion through social platforms in 2018, the EY & IVCA report said. That’s 30 percent of the $27 billion in online sales last year estimated by Forrester research.
“While Flipkart, Amazon and others have done a good job in going after the audience that is comfortable in consuming content in English, want branded fashion and phones, the rest of universe has been left out,” Mukul Arora, managing director at SAIF Partners, among the firs investors in Meesho, told BloombergQuint over the phone. “Meesho is going for those, for whom the gateway to information is WhatsApp.”
Meesho gets three-quarters of its business outside the top six cities.
Snapdeal and Paytm Mall also focus on low-cost products. But there’s lack of trust among consumers in tier 2 and 3 cities, according to Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India. Social commerce will create more first-time online because of the trust factor as recommendations are personal, he said. “These are created by people in their social network and if something goes wrong, they know who to reach out to.”
For Srivastava, community connections help win confidence. Just last week, she sold Rs 50,000 worth of products to more than 500 members on four different WhatsApp groups—one each for working moms, housewives, men and youngsters. “I’m able to make Rs 50,000 a month from margins and bonus.”
She also makes money by training 200-300 women who enrol on Meesho every month. Through walkthrough videos, she shares tips on sharing and selling products. For every order her pupils get, she gets a commission on its—like other multi-level marketing schemes. Srivastava has trained more than 2,000 women in six months.
Resellers on Meesho are secretive about their business. Anandi Bhatia, 46, has only told her very close friends about it. The former computer teacher, who quit last year as she was finding it difficult to manage home with job, said she makes about Rs 5,000 a month from margins and Rs 5,000-10,000 by mentoring others.
“If someone asks me where I get the products from, I tell them I have tied up with different suppliers,” Bhatia, based in Akola, Maharashtra, said over the phone. “If I’ll tell them it is Meesho, they will download the app and directly procure.”
Srivastava agrees. “Why would you want to give away your business secret?”
It’s not going to be easy for Meesho and its peers as Amazon and Walmart are also aggressively pushing into smaller cities and launching services in local languages. Ambani is building Reliance Jio Infocomm Ltd. into formidable service that offers data, content and commerce.
“If these large players start to put a lot of effort into marketing, it could have an impact,” said Pahwa. Meesho, he said, so far has the advantage of adding users faster than online retailers.
Inventory-less model with zero discounting lends an edge. But costs will rise as customers demand quality and the level of service provided by Amazon or Flipkart.
Priyanka, a Delhi-based seller for Meesho, has seen a spike in product returns citing poor quality, shrinking her earnings. The 22-year-old, on the platform for a year, said an increase in pricing of products also crimped her margins.
“Since Meesho deals with players in the unstructured category where most of the products are unbranded, it has to make sure the quality is not compromised,” said Satish Meena, senior forecast analyst with Forrester. That could lead to reseller and customer churn, he said, adding: “To maintain high quality is going to be a constant battle.”
For Srivastava, that’s not a worry just yet. Her immediate aim is to rank between 50 and 100 by sales on Meesho as that will win her a MI-branded LED television. “Right now, I’m at 143. I’m focused on making sure there are fewer returns and more sales.”