Ahmedabad: The Indian e-commerce sector is undergoing fundamental shifts driven by changing consumer behavior in Tier 2 cities and beyond, the influence of video platforms, and a major pivot toward affordability and direct-to-consumer models, according to the leadership of Meesho, India’s largest e-commerce platform by orders and customers, these trends are defining the future of online retail. The CEO and founders of Meesho were here to brief the media persons and interact with them.

The Ascendance of Value E-commerce

A defining trend in India, mirroring global emerging markets like China (Alibaba) and Southeast Asia (Shopee), is the dominance of the Value E-commerce model. Unlike the “Convenience Focused” model which targets Tier 1 customers with branded, inventory-based products and speed (like JD.com), the Value E-commerce model is built on volume, affordability, and a market-place structure.

The foundational problem in emerging markets like India is that most consumers have limited income but desire to purchase more goods and fulfill aspirations. This need for best value for money and affordability is what the value model addresses.

• Affordability Metrics: Meesho, which runs profitably at low price points, reports its Average Order Value (AOV) is 70% lower than the general e-commerce average, a figure that continues to decline annually as the platform becomes more efficient.

• Wider Reach: The platform’s focus on affordability has driven participation from “Bharat”—customers outside of major metropolitan areas. As a result, 88% of the platform’s customers come from beyond the top eight cities.

• Zero Commission and Competition: This affordability is sustained by Meesho’s zero commission business model, allowing sellers to offer better prices. Further driving prices down is the competition among the 7 lakh (700,000) sellers vying for visibility.

The Rise of Video Commerce and Influencer Monetization

One of the most significant changes observed is the massive amount of time people spend online watching short videos, such as Instagram Reels and YouTube Shorts. Consumers, whether in large or small towns, follow influencers, take their recommendations, and desire the products shown—but only if they are affordable within their income levels.

To capitalize on this, Meesho launched a Content Commerce platform, a three-sided marketplace connecting consumers, sellers, and influencers.

• Influencer Income: Sellers provide products to influencers, who create short videos that are shared on Meesho and external platforms. When a customer buys via the link, the influencer earns a commission from the seller. This allows the 50,000+ creators who used the platform in the last 12 months to monetize their following.

• Market Share: In the last 12 months, this platform facilitated 1,200 crore in sales. This investment is strategic, as the management notes that in other major emerging markets, such as China and Southeast Asia, 15% to 20% of the total e-commerce market is already dominated by video commerce.

Core Shifts in Supply Chain and Payments

The shift in logistics costs has fundamentally altered which categories can sell online, while payment methods reflect growing digital trust in smaller cities.

• Logistics Efficiency and New Categories: Historically, low-value categories like Home & Kitchen, with an average value of ₹150 to ₹250, could not be sold online because the high cost of logistics made them unprofitable. Following the launch of the asset-light logistics platform, LogiMo, and subsequent reduction in logistics cost, these categories can now be sold online profitably. For example, the Home & Kitchen category grew from 10% to nearly 20% of total platform orders in just two years. LogiMo currently handles 31% of all India’s e-commerce shipments and offers costs that are 10% to 11% cheaper than any third-party logistics provider.

• Decline of Cash on Delivery (CoD): A significant trend, especially in Tier 2 and Tier 3 cities, is the rapid shift away from CoD. Just three years ago, 95% of transactions on the platform were CoD; this has now dropped to 70%. More customers are now using UPI, having gained comfort and familiarity with digital payments through its offline use. This trend is favorable for operations, as it reduces costs and leads to better product pricing.

The Rise of Direct-to-Consumer Manufacturing

A powerful new trend observed is the ability of contract manufacturers to sell directly to end-customers online, a feat previously impossible in the offline world.

In the past, a contract manufacturer might produce items, such as diapers, for an established brand, which would then sell the product to the customer at a high price. Now, many contract manufacturers are creating their own brands on the platform and selling directly. This eliminates intermediaries, resulting in better prices for customers and allowing manufacturers to build their own brands for the first time.

The Next Frontier: Financial Services

The briefing highlighted that a significant blocker to consumption is the lack of credit access, particularly for the 23 crore customers using the platform who are often overlooked by traditional financial institutions. This has led to a major strategic investment in financial services, which is expected to be a major future trend.

• Consumer Credit: Many consumers still prefer local shops, even if more expensive, because they offer one month of credit (the khata system). Meesho is solving this by offering “Buy Pay” short-term credit products to customers, allowing them to manage cash flow similarly to how they use credit at local shops.

• Seller Lending: The company is also scaling a Seller Lending Platform with NBFC partners. This allows businesses to use their sales data to obtain working capital loans needed to expand production, buy raw materials, or purchase new machinery. The platform aims to provide loans to businesses that often face difficulty securing credit or are offered loans at very high interest rates elsewhere. This aligns with the model followed by major global e-commerce platforms, which use their extensive data to build large financial services businesses.

These overlapping trends—the move toward affordability, the fusion of content and shopping, the financial inclusion of consumers and sellers, and the supply chain optimization—all reinforce the platform’s success through a self-enforcing flywheel effect. This process begins by attracting critical mass (consumers and sellers), generating data, and using that data to create the best experience, which in turn attracts more participants, continually fueling the growth ecosystem.

More on Meesho’s story as shared by its Captains

Founded 10 years ago by IIT Delhi alumni Sanjeev Barnwal and Vidit Aatrey, the company was established with the mission to “democratize internet commerce for everyone,” recognizing that in 2015, e-commerce was largely limited to big cities, leaving most of “Bharat” (Tier 2 cities and beyond) excluded.

Driving Innovation and Scale

Meesho’s journey has been marked by continuous innovation tailored for the Indian user. Early on, the company realized that most Indians were only using WhatsApp, leading to the initial innovation of bringing e-commerce directly onto the WhatsApp platform for the first five to six years.

A critical business model innovation was the introduction of zero commission e-commerce in India. The founders recognized that high logistics costs and commissions (sometimes 20-30%) prevented many businesses, especially those with smaller margins, from migrating online. The zero-commission model suddenly brought a large number of Indian businesses online for the first time.

Over the past decade, Meesho has scaled significantly, reporting that 23 crore (230 million) Indians have made at least one purchase on the platform in the last 12 months. The platform hosts 7 lakh (700,000) businesses selling their goods.

Financial Strength and Growth Metrics

Meesho currently stands as the fastest-growing horizontal e-commerce company in India. Key financial metrics highlighted during the briefing include:

• Orders and Customers: 230 crore orders were placed in the last 12 months.

• Net Merchandise Value (NMV): NMV (GMV minus returns and cancellations) reached 300 crore in the previous fiscal year (FY25).

• Growth: The company reported 37% growth in orders and 30% growth in NMV year-on-year in FY25. This growth accelerated in the first six months of FY26, with orders increasing by 53% year-on-year and NMV increasing by 44% year-on-year.

• Cash Flow Positive: Meesho is currently the only company in the e-commerce sector that is Free Cash Flow (FCF) positive, generating 1,000 crore in FCF. Even excluding interest income, the FCF stands at almost 600 crore, numbers cited as the highest among listed e-commerce companies. The company also reported a bank balance of over 6,000 crore as of September.

Core Strategy: Affordability and Value E-commerce

The management attributes its success to being the lowest cost platform in the market, delivering the “best value for money” to customers. This affordability is enabled by five core factors:

1. Zero Commission: Allows sellers to offer better prices.

2. Lowest Cost Logistics: Meesho runs the lowest cost logistics network in India, resulting in minimum shipping fees for sellers.

3. High Order Volumes: High volume drives down logistics and operating costs.

4. Seller Competition: 7 lakh sellers compete for visibility, driving prices down further.

5. Low Overhead: Nearly 60% of the company’s total headcount is dedicated to engineering and product development, keeping general overheads low compared to other companies.

As a result, the platform’s Average Order Value (AOV) 70% is lower than the e-commerce average. This AOV continues to decrease annually as the platform becomes more efficient. This strategy has led Meesho to become the largest organized retailer in India by volume in categories like Fashion, number one in Home and Kitchen volumes, and a top-two player in Beauty and Personal Care.

Strategically, the company views itself in the Value E-commerce model, contrasting with the “Convenience Focused” model. Similar to Alibaba (China) and Shopee (South East Asia), the Value E-commerce model is built around volume, market-place business structure, and affordability, which best suits emerging markets like India where consumers have limited income and seek maximum value.

Asset-Light Logistics and Content Commerce

Three years ago, Meesho launched LogiMo, an asset-light logistics marketplace. This platform operates on the principle that the cheapest logistics are provided by a technology platform that does not own the assets itself, maximizing the utilization of existing logistics infrastructure (similar to Uber for cabs).

Today, LogiMo is India’s largest e-commerce logistics platform, with 18,000 companies offering services to Meesho’s merchants. LogiMo currently handles 31% of all India’s e-commerce shipments, and its cost structure is approximately 10% to 11% cheaper than any third-party logistics provider.

Additionally, the company introduced a Content Commerce platform—a three-sided marketplace involving the consumer, seller, and influencer. Sellers provide products to influencers, who create short videos that are shared on Meesho and external platforms like Instagram and YouTube. The influencer earns a commission from the seller whenever a customer buys through their video link. In the last 12 months, over 50,000 creators have earned income, and sales facilitated via this platform reached 1,200 crore. This investment is strategically aligned with the global trend where 15% to 20% of e-commerce markets in countries like China are now dominated by video commerce.

Technological Edge and AI

Meesho has built a highly advanced AI commerce stack optimized specifically for India. The app is optimized for users with low-end smartphones, featuring a small memory and storage footprint, and supports ten different Indian languages.
Technology is fundamental, with approximately 57% of employees being technologists. The company leverages AI for crucial decision-making, such as determining which 20-40 products are most relevant out of 15 crore (150 million) active listings for an individual customer, making every user’s feed unique. The company processes roughly three petabytes of data daily.

Notable AI innovations include:

• Geo India LL: This technology uses AI to understand unstructured addresses common in smaller Indian towns (e.g., “300 meters past this petrol pump, take a left”) and converts them into deliverable map locations.

• Automated Voice Support: Meesho has largely automated its customer support voice calls using an AI system that interacts with customers in a human-like manner, fetches real-time order data, and provides status updates, enhancing business efficiency.

Future Investments and Strategic Evolution

Looking ahead, the company outlined three key areas for continued investment, even as it prepares to go public:

1. Financial Services Platform: Using its data on 23 crore customers, Meesho plans to offer credit products like loans and credit cards to users typically ignored by traditional financial institutions. This includes “Buy Pay” products offering short-term credit, similar to the traditional khata system used at local shops. They are also scaling a Seller Lending Platform with NBFC partners to provide working capital loans to businesses.

2. Low-Cost Local Logistics Network: Creating a new supply chain through LogiMo to offer local products within the same city or district, especially for low-margin categories like groceries.

3. Advanced AI: Continued heavy investment in AI models for recommendations, shopping experience, customer support, and customer safety. DeshGujarat