How Meesho Became Profitable While Delivering Low-Value Orders Across India

Meesho, short for Meri Shop, was envisioned as a platform where every small business could have its own virtual store. Recently, the company achieved what many considered impossible: operational profitability.

To put this in perspective, consider profitability in the food delivery space. For example, a typical customer spends around ₹200. Compare that with Amazon, where the average order value is between ₹1,000 and ₹1,200, or Flipkart, which averages ₹1,800 per order. Meesho’s average order value, in contrast, is just ₹269, and the average delivery fee is a mere ₹37. Despite shipping products across the country, Meesho has managed to post profits—a first in its history.

The company has shown strong growth metrics. Its net merchandise value (NMV) increased by 44%, and order volumes grew over 50%. Meesho is now the largest e-commerce platform in India in terms of both orders and annual transacting users. This achievement is particularly remarkable considering the challenges of delivering low-value products across vast distances.

Three key questions arise when analyzing Meesho’s model:

Why is the average order value still just ₹269?
How does Meesho manage nationwide deliveries at an average fee of ₹37?
Is this strategy sustainable or merely a pre-IPO marketing tactic?

Understanding Meesho’s strategy begins with recognising India’s economic landscape. India consists of three distinct economies:

India 1 (India A): 12 crore people with an average income of ₹12.75 lakh per year.
India 2 & 3 (India B): 130 crore people with an average income ranging from ₹85,000 to ₹2.55 lakh.

E-commerce shoppers in India also fall into two categories. India A prioritizes brand and speed, willing to pay premiums for fast deliveries. India B, on the other hand, is focused on value for money and is exceptionally patient, often willing to wait 5–7 days to save a small amount on delivery. These shoppers seek cost-effective, often unbranded regional products, creating a massive opportunity for platforms like Meesho.

The opportunity was clear: unbranded and value-based products are cheaper, rapidly growing, and the market size is far larger than that of branded products. However, delivering low-value items at scale posed a significant challenge. For Meesho, shipping a ₹200 order with a conventional ₹50 delivery fee would make up 25% of the total cost, unlike Amazon or Flipkart, where delivery costs are a small fraction of the order.

In FY23, Meesho spent 84% of every ₹100 earned just on delivery, leading to heavy losses. This year, however, the company reduced its average delivery fee to ₹37, cutting losses by 93%—from ₹1,671 crore to ₹108 crore.

The secret behind this turnaround is Meesho’s innovative logistics platform, Valmo. Unlike Amazon or Flipkart’s asset-heavy models, which involve warehouses, sorting hubs, and air fleets, Valmo operates asset-light. It owns no trucks, warehouses, or bikes. Instead, it connects thousands of independent delivery providers—ranging from small local transporters to individual bike couriers—into a single cohesive network.

Here’s how a package moves through Valmo:

Photo Credit - Meesho

First Mile: A local rider picks up the package from the seller. By handling multiple orders simultaneously, cost per pickup drops dramatically.
Sorting: Local entrepreneurs convert small warehouses into sorting hubs, earning commissions while Meesho avoids overhead costs.
Middle Mile: Transporters, who would otherwise drive trucks empty, carry packages at discounted rates, drastically reducing costs compared to air transport.
Last Mile: Another local courier delivers the package to the customer.

Through this software-driven coordination, Meesho delivers products nationwide at an average cost of ₹20–40 per parcel. Deliveries are slower, often taking 5–7 days, but the margins are sustainable.

This model, however, comes with risks. Any disruption at a single point—such as a courier being unavailable or delays during peak seasons—can affect delivery efficiency. Financially, the low-ticket nature of orders leaves very little margin for error. Even small fluctuations in fuel costs or labor wages can impact profits significantly.

Despite these challenges, Meesho has successfully navigated a hyper-competitive e-commerce market, proving that a software-first, asset-light logistics approach can unlock previously untapped segments of the Indian market.

Meesho’s story demonstrates the power of innovation in logistics and the potential of serving India’s value-conscious majority. Its journey is a fascinating study in efficiency, scalability, and strategic risk-taking.

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