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Meesho eyes 1.2 bn shipments by next year using third-party logistics

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NEW DELHI : SoftBank-backed internet commerce firm Meesho is expecting to become the biggest e-commerce contributor in terms of shipments through third-party logistics (3PL) players such as Shadowfax, Ecom Express, Delhivery and Xpressbees.

Meesho is expecting to more than double the number of its shipments to over 1.2 billion through third-party logistics players for FY 2023, according to the sources. This is expected it help it become a major e-commerce player which uses 3PL platform ahead of Amazon and Flipkart, who also use 3PL platforms for some portion of their shipments, said people familiar with the matter.

In an interview, Sourabh Pandey, CXO, fulfilment and experience, Meesho said the firm is already accounting for about 35 per cent of all shipments delivered by national third-party logistics (3PL) players.

“Last year, (end) of the quarter, we grew almost 5x in terms of order volume,” said Pandey. “That has led us to become the single largest

contributor to the end to end third-party logistics (players).”

Meesho said it runs an asset-light model. It counts Shadowfax, Ecom Express, Delhivery and Xpressbees among its key 3PL partners. Meesho’s rapidly growing scale has been a key driver behind the expansion of the 3PL sector. Average daily orders on Meesho have risen nearly five-fold YoY to 2.4 million in January-March 2022.

Volumes in India’s 3PL industry typically peak during the festive season, in line with the seasonality observed in e-commerce. However, Meesho continued to grow its 3PL shipments by 16 per cent in January-March on the already high base of the previous quarter (October-December 2021).

“We do sale events (throughout the year) and we have seen the numbers only grow month-on-month. This way we are not dependent on the festive season.”

India’s unorganized retail sector, estimated to be $792 billion is set for the next wave of growth, with digitization and Meesho has the vision to enable 100 million small businesses.

Last year in September, Meesho raised $570 million from investors including Fidelity Management & Research Company, B Capital Group, a venture capital firm co-founded by Facebook co-founder Eduardo Saverin, Prosus Ventures, SoftBank Vision Fund 2 and Facebook.

Following the fundraise, the company’s valuation more than doubled to $4.9 billion in less than five months.

“In terms of the overall app downloads, we were downloaded over 100 million times in Q4, 2022,” said Pandey. “Our overall active user base is almost up 70-80 per cent year-over-year.”

Pandey said that Meesho is betting big on unlocking the Tier-2 and Tier-3 markets as well as rural India. “A lot of our growth is coming from these markets and now we are also entering rural (India) to a great extent.”

What is helping it to achieve is partnering with the 3PL providers. Pandey said any logistics network that has been built in-house only covers 50-60 per cent of India’s pin codes and not larger parts of India and that is why Meesho is dependent on the 3PL players.

“We did not feel the need to reinvent the wheel,” said Pandey. “They (3PL) are bringing economies of scale and expertise. We strongly believe that this ecosystem (3PL) can do a better job than any (inhouse logistics) network.”

Indeed, experts said that outsourcing logistics to a 3PL provider is cost-effective, gives access to cutting-edge transportation solutions, and enhances scalability, flexibility, and customer satisfaction. Most importantly, it allows companies to focus on their core competencies. At the same time, the increasing popularity of 3PL services has generated thousands of jobs for the country’s blue-collar workforce. In just 2 years, over 55,000 on-roll and off-roll jobs across first-mile, sortation, and last-mile delivery were generated by our key 3PL partners, a significant chunk of the overall employment opportunities created by the ecosystem.

For Shadowfax approximately 60 per cent of its drop-ship e-commerce volume is being contributed by Meesho. Shadowfax expects the momentum will only keep increasing as e-commerce adoption continues to rise in tier 2+ regions in the future.

“Shadowfax is rapidly growing its e-commerce 3PL business,” said Abhishek Bansal, CEO and co-founder, Shadowfax. “Meesho has been a key strategic partner and catalyst for this growth.”

Dipanjan Banerjee, chief business officer, Ecom Express Limited, said since the inception of the delivery company, it has been closely working with Meesho. “Asset light business models have been growing among new-age digital and e-commerce platforms, which has paved the way for their efficiency while playing a pivotal role in accelerating the growth of the 3PL eco-system.”

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