Meesho has become India’s first horizontal e-commerce firm to generate positive cash flow, marking a significant shift 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 ₹232 crores ($27.6 million) for the financial year ending March 2024, while growing operating revenues by 33% to ₹7,615 crores ($905.6 million). Its adjusted losses fell 97% from ₹1,569 crores to just ₹53 crores.
Meesho’s growth remains faster than the e-commerce’s surge in India. India’s e-commerce industry growth is expected to moderate to 17% in 2024 before accelerating to 20% in 2025, Bank of America analysts said this week. This relatively slower growth is attributed to consumption slowdown impact and slower apparel industry growth.
Flipkart’s marketplace arm grew its revenue by 21% to $2.12 billion in the financial year ending March, it disclosed in filings this week. Its losses fell 41% to $280.4 million.
The Indian commerce market is simultaneously being reshaped by quick commerce firms in urban cities. Blinkit, Zomato’s quick commerce arm, has expanded the network of so-called dark stores — the warehouses where it stores the inventory — and increased SKUs from 4-5,000 to over 10,000. The platform has also introduced new features including payment installment options for purchases above ₹3,000 ($35.7), 10-minute returns for clothing and footwear, and split shipments to expand its reach.
Quick commerce players — including BlinkIt, Nexus-backed Zepto, Prosus-backed Swiggy’s Instamart and Tata-owned BigBasket — are projecting to do annual sales of about $6 billion this year, according to a TechCrunch analysis.
For established players, the battle increasingly also appears to be about controlling the full stack. Both Amazon and Flipkart now handle about 90% of their deliveries in-house, while Meesho has launched its own logistics service called Valmo to optimize shipping costs. Valmo is handling roughly 35% of all Meesho orders, Bank of America says.
The shift comes as competition for India’s next hundred million internet shoppers intensifies. Meesho reports that 45% of its customers now come from tier 4 cities and beyond, with 145 million unique annual transacting users – representing approximately 10% of India’s population.
“We’re also seeing a substantial influx of new-to-e-commerce users, demonstrating our success in acquiring customers from India’s underserved markets,” Meesho said in a statement. “This not only highlights the vast potential for e-commerce in India but also underscores our vital role in making e-commerce accessible to regions that have historically been overlooked.”
Bank of America expects around 120 million new online shoppers to enter the e-commerce market over the 2024-27 period, with the base likely to reach 380 million. Approximately 75% of these new users are expected to come from Tier-2/3 cities, representing a distinct cohort of first-time online shoppers.