Can Meesho's Business strategy beat Amazon? | Business Case Study

Summary

Highlights

• Meesho is profitable in less than 10 years, unlike Amazon and Flipkart 🏆.
• Focus on tier 2 and 3 cities has been key to their growth 💡.
• Zero commission for sellers makes Meesho attractive to small businesses ❤️.
• Efficient logistics and no seller tiering contribute to Meesho’s unique model 🚚.
• Strong customer retention and 32% user growth annually 📈.

Key Takeaways

• Meesho's success lies in targeting untapped tier 2 and 3 cities 🏙️.
• Zero commission model empowers small sellers to thrive 💸.
• Rapid growth due to asset-light logistics and efficient strategies 🚀.
• Strong customer retention with 80% retention rate 👫.
• Meesho avoids competing with its own sellers, unlike Amazon 🔍.

Overview

Chapters

• 00:00 - 00:30: Introduction to Meesho's Business Model The opening chapter introduces Meesho as a revolutionary Indian startup transforming the e-commerce landscape. It highlights Meesho's influence in empowering small sellers across India to engage in online selling, enabling them to reach distant markets. Examples include sellers from Rajasthan and Maharashtra shipping products across the country. The chapter hints at Meesho's notable achievements compared to established e-commerce giants like Amazon and Flipkart.
• 00:30 - 01:00: Meesho's Profitability Compared to Competitors The chapter discusses how Meesho has achieved profitability in the Indian market by focusing on empowering small sellers. Unlike other competitors such as Flipkart and Amazon, Meesho has democratized internet commerce, making it accessible for everyone in India. The company has grown into a billion-dollar entity, offering products that are significantly cheaper (by more than 60%) compared to other marketplaces. Its strategy includes targeting smaller towns and cities, contributing to rapid expansion in the fast-growing e-commerce sector.
• 01:00 - 01:30: Meesho's Market and Target Audience Meesho has emerged as a challenger in India's e-commerce market by being the only true horizontal and profitable marketplace. Their vision is to empower 100 million small businesses in India to thrive online. Interestingly, the average order value (AOV) on Meesho is relatively low, ranging from 360 to 370 rupees, compared to Amazon and Flipkart which have an average order value of around 1,000 rupees. Additionally, 65% of the products sold on Meesho contribute to its unique positioning in the market.
• 01:30 - 02:00: Challenges Faced by Small Businesses in India The chapter discusses the rise of Misho, a profitable e-commerce unicorn in India, which is managing to provide products 20 to 30% cheaper than its competitors. Misho's growth is remarkable, with a 32% increase in active users as of December 23, surpassing the 13% and 21% growth of Amazon and Flipkart, respectively. Additionally, Misho boasts a high customer retention rate of 80%. Overall, these factors contribute to Misho's success despite the competitive pressures faced by small businesses in India.
• 02:00 - 02:30: Finding Gaps in the E-commerce Market The chapter titled 'Finding Gaps in the E-commerce Market' discusses how the company Misho managed to grow and achieve profitability amidst tough competition from giants like Amazon and Flipkart. The chapter delves into Misho's business strategy that allowed it to thrive in the hyper-competitive e-commerce market. It emphasizes identifying market gaps and provides business lessons from Misho's successful rise in the Indian e-commerce industry.
• 02:30 - 03:00: Meesho's Founding Vision and Approach The chapter discusses the rise of e-commerce in India, highlighting its significant growth. The vision for e-commerce is to empower Indian consumers with data to help them achieve their dreams and elevate India to global digital leadership. The transcript provides statistics showcasing the scale of this industry, including the sale of a thousand mobile phones every minute, and billions of dollars in e-commerce sales involving nearly 18 million shoppers across various platforms.
• 03:00 - 03:30: Transition from WhatsApp to B2B2C Model The chapter discusses the transition from a WhatsApp-based model to a B2B2C (Business-to-Business-to-Consumer) model, highlighting significant e-commerce growth in India. Starting at $12.93 billion, the market is projected to grow to $299 billion within five years, marking a 164% increase. Despite this growth, e-commerce only captured 8% of India's total retail market by 2022, indicating significant potential for future expansion.
• 03:30 - 04:00: Meesho's Transition to a B2C Model This chapter discusses Meesho's strategic pivot towards a business-to-consumer (B2C) model in the vast, untapped Indian market. It highlights that while major players like Flipkart and Amazon concentrated on tier-1 cities due to their better infrastructure and tech-savvy consumers, they overlooked the immense potential of the 60 million small and medium enterprises across India. These businesses make up a significant 85% of the market, indicating a huge opportunity for Meesho to capitalize on by focusing on broader geographic and demographic segments.
• 04:00 - 04:30: Revenue Model and Performance Marketing The chapter discusses the challenges faced by e-commerce in tier 2 and tier 3 cities, where many people had never used online shopping due to perceptions of high cost and complexity. This led to a significant portion of the market being excluded from the e-commerce boom in India. The founders of the company 'Misho' identified this gap in the market, realizing that while many focused on other markets, there was a significant opportunity in these underserved areas.
• 04:30 - 05:00: Benefits of Meesho's Business Model The chapter discusses the benefits of Meesho's business model, particularly focusing on its impact on tier 2 and tier 3 cities in India. It highlights how these areas were previously overlooked by the e-commerce industry. Meesho identified three major pain points in the existing e-commerce setup, with the primary issue being the high cost of selling on these platforms. The chapter uses a table to illustrate how much sellers need to pay in commissions and services on platforms like Flipkart and Amazon, where sellers retain only 60% and 70% of their selling prices, respectively.
• 05:00 - 05:30: Meesho's Asset-Light Marketplace Model The chapter discusses Meesho's Asset-Light Marketplace Model and highlights significant issues faced by small and medium-sized businesses in India when selling online. It notes the high commission fees and GST, which account for 30 to 40% of the selling price, deterring many small sellers from participating in e-commerce. Consequently, a large portion of the 63 million MSMEs in India were either struggling or avoiding e-commerce altogether. Identifying this as a critical gap in the market set the stage for Meesho's innovative model.
• 05:30 - 06:00: Logistics Cost Reduction and Benefits The chapter discusses the challenges of low e-commerce penetration in tier 2 and tier 3 cities, attributed to limited awareness and trust among small sellers. Another issue highlighted is the lengthy payment cycles, which can extend up to 19 days, including clearance time. This delay can impact sellers' cash flow, as they must wait a significant period to receive payments after a sale.
• 06:00 - 06:30: Meesho's Competitive Advantages and Market Impact The chapter explores how Meesho's 19-day credit cycle impacts small business owners, using a hypothetical example of a business owner named Mr. Ram. The example illustrates the financial challenges faced when revenue is delayed, affecting cash flow and reinvestment capabilities.
• 06:30 - 07:00: Customer Feedback and Quality Assurance The chapter titled 'Customer Feedback and Quality Assurance' discusses a scenario involving a character named Ram who faces a dilemma in managing his production schedule and finances. In weeks two and three, Ram needs to deploy an additional 8 lakhs (4 lakhs each week) to maintain his production without interruption. However, due to payment delays, he might have to halt production for 19 days while waiting for a 5 lakh payment. This situation is impractical as a factory shutdown isn't feasible. Ram's possible solutions include deploying 8 lakhs as extra working capital or taking an 8 lakh bank loan to continue operations.
• 07:00 - 07:30: Final Business Lessons from Meesho The chapter explores the challenges faced by micro, small, and medium enterprises (MSMEs) in India, particularly focusing on high-interest rates and lengthy payment cycles that affect their profitability. The chapter discusses the market gaps that existed due to high commissions, low awareness and trust, and prolonged payment cycles. It highlights that these obstacles led to the inception of Meesho in 2015 by Sanjee and Vidit. Their vision was to democratize internet commerce for everyone, focusing on empowering small sellers in India.

Can Meesho's Business strategy beat Amazon? | Business Case Study Transcription

• 00:00 - 00:30 hi everybody misho is one of the most revolutionary startups of India and the reason why I call them revolutionary is because they have redefined the Playbook of e-commerce in India so much so that today millions of small sellers who never thought of selling online are now shipping products all across India Today a junga Wala from Rajasthan is able to ship his products to the neighborhoods of Kashmir and a clothing retailer from Maharashtra is shipping her t-shirts all the way to kyak Kumari and you would be shocked to know that while e-commerce giants like Amazon and Flipkart have
• 00:30 - 01:00 been burning cash in the Indian Market misho has already achieved profitability in the Indian market and that to by empowering the smallest sellers of India so by democratizing internet Commerce for everyone in India misho today has become a billion dooll company misho has become really the alternative for the flip carts and the Amazon of the world I think more than 60% of our products are decently cheaper than any other Marketplace it's a fast growing e-commerce Market it targets smaller towns and cities its rapid expansion and
• 01:00 - 01:30 execution has helped it emerge as a Challenger in India's e-commerce space currently Misha is the only true Marketplace which is horizontal and profitable as well our vision is to enable 100 million small businesses in India to succeed online and you know why this is even more surprising the average order value of misho is just 360 to 370 rupees while for Amazon and Flipkart they have close to 1,000 rupes in aov on top of that 65 % of the products sold on
• 01:30 - 02:00 misho are 20 to 30% cheaper as compared to their competition but even then somehow misho has emerged as a profitable e-commerce unicorn in India and that too in less than 10 years and Mishu is growing so fast that while Amazon and flipkart's active users grew by 13% and 21% mish's active users as of December 23 grew by 32% year on year and you would be shocked to know that the customer attention rate for misho is as high as 80% so the burning question over
• 02:00 - 02:30 here is how on Earth did misho manage to grow their business and achieve profitability in spite of the presence of Amazon and Flipkart what exactly is the business strategy to achieve profitability in a hyperco competitive market like e-commerce and most importantly what are the business lessons that we need to learn from the profitable rise of [Music] misho to understand misho the first thing you need to understand is the e-commerce industry of India and the Gap that misho identified and we all know
• 02:30 - 03:00 when e-commerce in India started catching fire right GI will give the power of data to each Indian to fulfill every dream and to collectively take India to Global digital leadership a thousand mobile phones sold every minute seven t-shirts three saries and four pairs of Footwear sold every second $5 billion worth of e-commerce sales in nearly 18 million Shoppers across all platforms if we see the size of the Indian e-commerce Market today it stands
• 03:00 - 03:30 at $12.93 billion and it is expected to grow to $299 billion in the next 5 years that's a staggering jump of 164% but if you look at how much of this Market has been scrapped out of the conventional retail you will realize that e-commerce is just getting started in India if you look at this chart as of 2022 e-commerce has grown to reach just 8% I repeat 8% of the total retail Market in 2022 so
• 03:30 - 04:00 92% of this Market is still left unpenetrated and back then when Flipkart and Amazon were riding the internet wave of India they were primarily focused on tier one cities and it does make sense right tier one consumers have higher disposable incomes they easily adopt to new technology and there is enough Logistics infrastructure in these cities which increases your probability of success but you know what guys most people forget that India is home to 60 million small and medium businesses that contribute to 85% I repeat 85% of the
• 04:00 - 04:30 overall retail Market but even then a large chunk of these people in tier 2 tier 3 cities back then had never used e-commerce and even today a large chunk of people have never used e-commerce at all this was simply because they felt it was too costly and it was too complex so both a large segment of buyers and sellers were unknowingly excluded from the e-commerce revolution of India and this is where ladies and gentlemen the founders of misho sanjie and withit found a gap in the market they realized that while everyone was poish on tier
• 04:30 - 05:00 one cities the tier 2 and tier 3 cities of India were not being addressed properly by the e-commerce revolution of India and they found three major pain points in the existing e-commerce industry back then the first paino was the cost of selling on these platforms if you see the cost of doing business on e-commerce platforms is very very high so if you look at this table it shows how much a seller needs to pay in commission and services on different platforms so sellers on Flipkart get 60% of their selling price and on Amazon they get 70% of their selling price so
• 05:00 - 05:30 30 to 40% of their selling price goes into just commissions fees and GST and this is a very high percentage for a small and mediumsized business this is the reason why many small sellers refrain from selling online and they just focus on offline retail this is the reason why a market of 63 million msmes were either struggling or were not selling on e-commerce at all so long story short the commissions were painful for the online sellers of India this is the first Gap that they found in the market the second Gap that they found
• 05:30 - 06:00 was the low penetration of e-commerce in tier 2 tier 3 cities and like I said it was due to the lack of awareness and Trust amongst the small Sellers and the third pain point that they found was that the payment Cycles were as long as 14 days plus another 5 days for clearance to tell you about it if Mr Ram is a seller on Flipkart and sells a 500 rupee t-shirt he gets that 500 rupees in his account after deducting the commission after 14 + 5 that is 19 days so the sellers have to wait for 9 20 days to get their money in their account
• 06:00 - 06:30 now you might say bro what is a big deal in this this is how business is done right well let me tell you what is the impact of this 19-day credit cycle on a small business owner and then you tell me whether it looks like a big pain or not let's say Mr Ram invests 4 lakhs into his raw materials and then sells products at the end of the week to generate 5 lakhs in Revenue now if he gets this 5 lakh rupees on the same day he can take home 1 lakh rupees and reinvest 4 lakhs for the next week's raw materials but if he get paid after 3
• 06:30 - 07:00 weeks then for week two and week three he has to deploy another 4 lakhs plus 4 lakhs for 2 weeks just to keep his production going or he will have to halt his production for 19 days wait for the 5 lak rupe payment to come and then he has to start his manufacturing again and this is obviously not practical right you can't just shut the factory for 19 days so in this case what will Ram do he will either have to deploy 8 lakhs in extra working capital or Mr Ram will have to take out a bank loan of 8 lakh
• 07:00 - 07:30 rupees and then he will have to pay an interest of 10 to 12% which degrades his profitability this is the cost of the 19-day payment cycle in the life of an msme owner so to sum this up what were the gaps in the market High commissions low penetration due to lack of awareness and trust and very long payment cycle this is the reason why in 2015 sanjie and with decided to start a company that we all know today as misho and their Vision was to democratize internet Commerce for Everyone by empowering the small sellers of India with the
• 07:30 - 08:00 convenience of e-commerce and the superpower of e-commerce supply chain at the same time they also wanted to empower the buyers of India with affordable pricing and easy interface and the accessibility of a vast catalog and fast forward to today which is 9 years later misho has more than 1.8 million sellers selling more than 120 million products and like we said before today products on misho are 20 to 30% cheaper than other e-commerce websites so now the question is when Amazon and flipcart both had the first more
• 08:00 - 08:30 Advantage how did misho crack the e-commerce industry of India and become profitable well this is a story that dates back to 2015 when withit and sanjie saw a shopkeeper at a garment store in cor mangla who sold his products using a WhatsApp group and they were shocked to know that 40% of the store sales were coming from WhatsApp group itself so you know what they did they thought of making WhatsApp groups to empower these retail shopkeepers to sell more and they did it with a company named fash near but soon enough they realized that managing Commerce on WhatsApp was not practical for two
• 08:30 - 09:00 reasons number one most of the times these shops were out of stock and even then the customers used to place orders so the shopkeepers had no option but to apologize to the customers for not having enough stock and secondly cash on delivery turned out to be a big big pain why because during that time UPI and PTM like apps were not normal so the delivery person would pick up the order deliver it to the customer take the cash go back to the seller and then give that cash so the logistics cost of cash itself was very very high and the hassle was too much so in 2016 they revamped
• 09:00 - 09:30 this model and moved from WhatsApp group to an app and this time they called it misho 1.0 so this was basically a B2 b2c model so if Mr sham is a garment reseller who wanted to sell to his customers he would use misho to order products from his supplier and then sell to his customers so misho was a platform for businesses to sell to customers offline so it was a B2 b2c model and this model was doing very well but soon enough customers all across India started adopting to e-commerce after
• 09:30 - 10:00 covid and within no time many people discovered misho through word of mouth and eventually the customer started buying directly from the sellers on misho so now instead of Mr sham buying it to resell to his customers offline his offline customers directly started buying from misho so misho transitioned from a B2B Toc model to a b2c model where customers bought directly from misho and today Mishu is majorly a b2c business so now the question is Mishu became just like any other e-commerce platform right because even Flipkart and
• 10:00 - 10:30 Amazon did the same so what exactly was different about misho well if you understand this difference you will automatically get a deeper insight into their business model firstly unlike other marketplaces where sellers only get 60 to 70% of their selling price in their hand misho charges 0% commission with a small fulfillment fee which depends on the region that the seller is based out of so if you list your product on flipcart for 1,000 rupees as we saw in this table you will get only 600 rupes on Flipkart and on Amazon you will get 700 rupe but on misho you will get
• 10:30 - 11:00 the whole amount with a slight deduction of the fulfillment fee so now the question is if misho doesn't make money from sellers then how does misho generate Revenue well misho monetizes their platform through performance advertising by sellers so if you're a seller on misho you do not have to pay any commission or an upfront platform fee but as sellers you can choose to advertise your products on the MEO platform so just like your Performance Marketing on Instagram and YouTube you as sellers can select a product from
• 11:00 - 11:30 your catalog allocate an advertising budget and select the duration for the ad and then you can choose to Target your customers with this ad to increase your sales and here's where you need to understand the different pricing models of Performance Marketing in simple words these pricing models can be named as cpv CPC CPA and CPM cpv is the cost per view model wherein the platform charges The Advertiser each time the ad is viewed so the cost is based on the viewership of
• 11:30 - 12:00 the ad CPC is cost per click model wherein the advertisers pay for each time someone clicks on their ad so in CPC the focus of the advertiser is more on converting the customer rather than brand awareness thirdly we have the CPA model or cost per action model wherein the advertisers only pay when a specific action such as a sale download or sign up is completed and lastly we have the CPM model which is cost per Millie or cost per thousand impression so in this model advertisers pay for
• 12:00 - 12:30 every th000 impressions of their advertisement and this model is again used for brand awareness so when it comes to misho it mostly depends on the CPC model to charge the sellers why because these small sellers are more concerned with conversion rather than brand awareness to give you a deeper understanding of the same let's say Mr Ram who sells men's garments wants to increase his sales of a particular type of shirts so he can select this shirt specifically for an ad campaign and Misha will move his catalog to the top of all discovery pages so whenever a
• 12:30 - 13:00 customer searches for t-shirts Ram's catalog will be promoted and it will be recommended to the customer so along with Organic listings even Ram's products will appear more often so it's almost like Google listing it's sponsored ads ahead of all the organic listing and this is something that you'll see on Amazon also whereby amongst all the organically listed products there are some products that are sponsored products as in for these products The Advertiser has paid money to Amazon such that those products could
• 13:00 - 13:30 appear more often in front of the customers so amongst many many organically listed products you will see some products that are sponsored but this brings up another important question does it mean that the other sellers who do not pay for advertising are treated unfairly well not at all because if Misha any of the platform does that they will incur losses themselves which is why misho maintains a healthy percentage of 15 to 20% for ad listing and the rest are organic and for this advertising Ram can allocate a budget for example if Ram is setting a budget of 10,000 rupes then Ram R will only be charged if his advertisement
• 13:30 - 14:00 gets clicks shares or if this product is added to the wish list and if there are no Clicks in just views then Ram will not be charged at all and after this campaign is done Ram can use his campaign analytics to choose how he wants to modify his campaign if he wants more return on investment now do you realize this way Mishu has made Performance Marketing accessible to the smallest vendors of India and this is what makes them a major driver of the digital revolution of India cherry on the cake Misha also has something called
• 14:00 - 14:30 the supplier panel to assist the sellers so the sellers get recommendation from the panel and this panel helps them get recommendations for example their price recommendation tool helps the sellers set prices gives them information on what is the average selling price of other sellers in the same category and misho even tells them which products sell well during a particular season so that the sellers can stock up their inventory accordingly this is how Mishu has empowered the small and medium sellers of India and the fun fact is that even manufacturer make up 55% of
• 14:30 - 15:00 the sellers on the platform and today misho has 120 million average monthly active users and it is the fastest growing e-commerce platform in India and you know what guys this unique and bold business model gave misho two incredible advantages firstly since the platform has zero commission sellers often pass on the savings to the customer for example if the original selling price of the product is 1,000 rupees and a seller incurs a 30% Commission on it it would sell for 1,300 rupes right but on Mish
• 15:00 - 15:30 show the seller doesn't incur this 300 rupe commission at all and he's able to sell it at 1,100 rupes whereas on other platforms the same product is available at 1,300 rupees and this 300 rupee difference is where the magic is because do you realize India is a country where 80% of the people make less than 30,000 rupees a month so a 200 to 250 rupees price difference is a very very big deal for this customer base so guess what this Delta in price results in a large pool of customers deliberately choosing
• 15:30 - 16:00 misho over other platforms as a result misho acquires more customers these customers buy more from sellers eventually resulting into more sales and this further encourages more sellers to come on the platform which again gets more customers on the platform this is the first differentiator of misho which is a zero commission model and the revenue model that is based on Performance Marketing the second differentiator of miso is that they have reduced the payment cycle for these sellers from 19 days to just 7 days now
• 16:00 - 16:30 what is the benefit of this well let's understand this using Mr Ram's context earlier if you remember Mr Ram got paid after 19 days so he either had to put in 4 lakhs in week 2 and 4 lakhs in week three or he had to take out a loan of 8 lakh rupes in working capital for week 2 and week three but now with a 7-Day payment cycle Mr Ram will have his 4 lakh rupees in working capital for next week at the end of week one itself so he won't have to put in another 8 lakhs in
• 16:30 - 17:00 extra working capital and he doesn't need to borrow 8 lakhs from the bank and then pay a 10 to 12% interest so do you realize this is a very very big deal for the small sellers of India and most importantly the third differentiation of misho is that they do not compete with their own sellers which means what just like Amazon launched Amazon Basics Flipkart has launched Flipkart Smart Buy so if you see by launching these products these e-commerce platforms are competing with their own sellers but Mish does not have any private labels to
• 17:00 - 17:30 compete with its own sellers at all in fact if you see this table Amazon has more than 110 private labels like Amazon Basics and Amazon essentials Flipkart has 14 plus private labels like marq and smart bu whereas misho has zero private labels now you might say bro how is this a big deal well let me tell you guys that the margins in private level brands for e-commerce platforms are sometimes double as that from sellers in fact you would be shocked to know that the margins in private level Brands could go as high as 60 to 65% also so even though
• 17:30 - 18:00 there is a profit to be made misho does not have private labels and this is because Mishu wants to stick to its vision of empowering the small and medium scale business owners to build their business rather than competing with them and they believe that with this philosophy they'll be able to make more profit as compared to competing with their own sellers fourthly misho has an asset light model unlike other e-commerce platforms like Amazon and flip cart so as usual let's understand this with an example example briefly so
• 18:00 - 18:30 if you look at the e-commerce models across the world you will see that there are two types of models the first is the inventory model and the other is a Marketplace model for example let's say you sell books on a platform called tramazon let's say it takes you 200 rupes to produce this book and you sell this book on tramazon at 500 rupees now if tramazon operates with the marketplace model so all that tramazon will do is just list your products on its platform and after the customer places the order tramazon will collect the product from you and then take it to the customer using tramazon Logistics so
• 18:30 - 19:00 in this story if you see tramazon is only acting as a listing platform and a logistics partner right this is what you call as a Marketplace model whereby the platform merely helps you list and ship your products to the customer and in return the platform charges you a fulfillment fee plus Marketplace commissions but if you look at the inventory model in this model what razon would do is it would directly buy 10,000 books from you in bulk and pay you 300
• 19:00 - 19:30 rupes per book now because you're getting to sell your books in bulk instead of 500 rupes you would agree to sell it to tramazon at 300 rupees and just like you many other sellers will sell their products at a lower price to tramazon because they're buying in bulk and then you know what tramazon would do tramazon would sell these products at whatever price they want so today they might sell it for 400 rupees and tomorrow they might put up a 20% discount and sell the same product at 320 rupees and some sometimes they might even provide a lightning deal at just
• 19:30 - 20:00 305 rupees and this time when someone places the order tramazon would just ship this product from its Warehouse instead of collecting it from you so this is how the inventory model works whereby the platform itself collects inventory from the seller and then ships it to the customer from its own inventory in this case while Amazon and Flipkart use Hybrid models which is a mix of both inventory and Marketplace model misho primarily operates only with Market Place model and this is what
• 20:00 - 20:30 gives them three major advantages number one they do not have to worry about procuring products in bulk from sellers so they do not have to make heavy investments into buying or storing inventory number two they do not have to worry about changing the prices and optimizing for sales and lastly they do not have to worry about dead or waste inventory This Is How They remain asset light so less investment less hassle and less wastage now this is not to say that a platform cannot make profit using inventory model it's just that different platforms have different philosophies in
• 20:30 - 21:00 case of misho it has an asset light philosophy and this is what brings us to the fifth differentiator of misho which is they do not do seller tiering for those who don't know seller tiering means prioritizing a certain group of sellers over others based on their performance so the better you perform the better benefits you get for example Flipkart has gold silver and bronze so you will be categorized in these categories based on your performance in the last 90 days and if you fall in Gold you will get benefits it's like 20% discount on shipping payment Cycles will
• 21:00 - 21:30 reduce to 7 days from 15 days and your visibility will increase eventually you will also get better support from flip cut similarly if you go down to Silver you will get a little less benefits and for bronze it is even lesser now you might say bro what exactly is the problem with this model because if you're incentivized based on your performance and you're given benefits then that's great right well on the outside yes this does look fantastic but if you look at this model from a new seller standpoint then it gets a little difficult so for a new seller it will be
• 21:30 - 22:00 very difficult to outpa someone who is already in the gold category because the gold seller will keep getting better terms to grow their business so because of this it seems as though the gap between the big Sellers and the small sellers will keep on increasing and if you look at Amazon some 33 Amazon sellers accounted for about 33% of all the goods sold on the company's website and that means a few sellers are prioritized over a big chunk of small Sellers and this has also led to a lot
• 22:00 - 22:30 of legal litigations against Amazon but when it comes to misho misho does not prioritize a few sellers over others they treat all their sellers equally and because of this they've been able to attract a lot of Sellers from tier 2 tier three cities and lastly misho has worked heavily in reducing their Logistics cost for the sellers and since the aov on misho is anywhere between 300 to 350 rupees the sellers with such low aov they feel the pinch when they have to incur 60 to 70 rupees in shipping and
• 22:30 - 23:00 even more in Reverse shipping when the products are returned so Mishu reduced the cost of shipping from 30% of the average order value to around 15 to 20% of the average order value and it further plans to reduce this number to Just 8 to 10% of the average order value so now the question is how are they able to do it very simple they are able to do it because of three reasons number one misho has the scale of 3 to 3.5 million shipments a day secondly they have outsourced their entire Logistics to third party Logistics partners and
• 23:00 - 23:30 thirdly mish's share in the overall outsourced e-commerce Logistics Market is about 40 to 45% so in short misho is actually increasing the asset utilization of all these Logistics Partners as a result misho is able to negotiate better prices with these partners and secondly mish's customers are not looking for same day or next day delivery if you remember from our quick Commerce case study mish's customers choose misho for value and not not for convenience secondly Mish Show's
• 23:30 - 24:00 customers are not looking for same day or next day delivery so since goods are transferred in large volumes the vehicle in logistics utilization is more than 80% so the cost is brought down with scale and volume of products per shipment and better negotiation due to meur skill this is how by tapping into the tier 2 tier three cities of India by solving the most important paino of the msms in India by building an asset light Marketplace model combined with zero commission and and a super efficient Logistics partnering misho has built a
• 24:00 - 24:30 profitable billion dollar company in spite of the Cutthroat competition in the e-commerce industry of India and the result well the word of mod spread so Mishu got customers without ad spin as a result their customisation cost went down and because of cost efficiency their overall sgna expenses reduced from 53% of Revenue to 20% in H1 fi 2324 and eventually the revenu sold to give them more profits and now to go with misho
• 24:30 - 25:00 flipcart has launched Flipkart shopsy and Amazon has announced the launch of Amazon Bazar this is a story of mish Show's robust and bold business model and before we dive into the lessons I wanted to discuss something very very important people a few days ago I put up a community post asking about your experience with misho some of you mentioned common issues in misho and the e-commerce industry in general which was about product quality returns and refunds so to understand this better I reached out to misho directly to see how they are solving these problems because
• 25:00 - 25:30 this is something even d2c Brands face on a daily basis so they shared some interesting strategies like barcoded packaging scan and pack programs and many such cases where they use technology to build trust and solve the problems in their supply chain and all thanks to these strategies Mish Show's return success rate stands at 96% and on an average refunds are processed within just 25 minutes of the pickup with the majority of them being processed in just 5 minutes additionally last year misho
• 25:30 - 26:00 released something called the trust Assurance report which explains how misho has actually Sol the most common problems of e-commerce using simple and effective strategies so if you a misho customer seller or if you are building your own Marketplace business this report is incredibly insightful I'll attach the link to the blog in the description so go through it and let me know what you think if this is clear to you let's move on to the business lessons that we need to learn from the rise of Mish show lesson number one when you have giant competition in the market
• 26:00 - 26:30 the best way to build a business is to build a business in the blue ocean in this case Mish Show's blue ocean were the tier 2 tier 3 cities of India lesson number two the tier 2 and tier three cities of India have a massive potential that a lot of people neglect so if you can build a business here it's a blue ocean that is just waiting to be tapped and lastly jackma once said that you might be the shark in the ocean but I am the crocodile of the yat river in this case while the Giants of e-commerce focused on tier one tier 2 cities and
• 26:30 - 27:00 the big sellers of India misho turned out to be a savior for the small sellers of India and for the manufacturers of India and this turned out to be the greatest Advantage for misho to become a profitable billion dollar e-commerce company in India that's all from my side of today guys if you learned something valuable please make sure to H the like button and order to make Bey Baba happy and for more such insightful business and political case studies please subscribe to our Channel thank you so much for watching I will see you in the next next one bye-bye
• 27:00 - 27:30 [Music] [Music]