Vidit Aatrey on Building Meesho, India's Top Reselling Platform, with Adora Cheung
— Podcast Summary — 6 min read
90% of commerce in India happens in small mom & pop stores, and for every one of these stores there are hundreds other who want to start the store but are not able to due to capital, India being not a rich country, most people don't have access to capital.
These people who didn't have the opportunity to start a store came on the Meesho platform and became an entrepreneur for the first time.
As they don't have any working capital or physical shop, they can come on the platform and start their own shop on WhatsApp, access anything from their supply marketplace and only when they get an order they purchase from the marketplace.
This took away the barriers of entry.
Almost everyone using their app has become an entrepreneur in some sense.
So as said, 90% of commerce happens in these small stores. In societies, people will put a board outside and just start selling products. Most of these products are long-tail and unbran100ded products.
People generally don't know these products, so these small shop owners through their trust relationship they go out and push these products, highlight what is special about it, then people start buying and start recognizing these emerging brands.
Selling unbranded products say in a mall has never happened in India, it has always worked through this mom & pop stores. All big destination marketplaces in India today also sell largely branded products.
None of them these companies have figured out how to sell unbranded products, but now Meesho is changing the landscape by helping people sell online on social channels across categories.
Taking the same value what these small store owners were doing offline and bringing it online by giving them the tools required in this digital world.
Macro trends in India that allowed them to grow so fast.
- Whatsapp started to become more and more popular around 2015.
- Jio happened in 2017 which enabled lots of people to come online for the first time.
- UPI becoming big recently
People from tier 2, tier 3 and other less developed areas in India were mostly the ones buying these unbranded products and were the ones who were brought online by Jio.
Starting the business at exactly this point has been very helpful for Meesho and several other startups.
India is considered a trust-deficit market. The reasons are:
- Most people don't believe in corporate companies
- They don't believe in government
- don't believe in the judicial system
They think I am the only one looking after myself and believe only in friends and community and someone that everyone believes in
So difficult for a new merchant to come and build trust with consumers out in the open market.
Meesho ends up leveraging the trust of people in their own community who come and start these social stores and then start selling to people around them, especially an unbranded product.
Let's get some sense of who their users are: 80% of users are female and 70% are housewives coming from tier 2 & tier 3 cities. Meesho gave them a platform for not only to make money but also achieve professional identity.
Most women in India feel that their family or their husband don't give them the respect or importance that they deserve. But now when they are known as businesswomen in their community, people start recognizing, respect them. They can go out and say see I run my business and this is what I did last year. that feeling is very very empowering
Most impactful user stories aren't about how much money the user made on their platform but how much upliftment they felt after starting their own business.
This impact tells Meesho that people are finding value in the product they are building
The Northstar metric has always been - How to increase the income per reseller every month
Know when to aim for growth and when to aim for quality for the already onboarded customers. Both to grow and to retain are equally important. Know when to focus on what.
Q - What if Facebook does the exact something that Meesho is doing?
A - What Meesho is doing is one of the so many things that will happen on the Facebook ecosystem as it grows. If Facebook starts doing everything then they won't be able to focus on things they are doing now.
Example of this - See China, Tencent invests in so many companies that leverage WeChat. This is because they know they can't do everything themselves.
Facebook can't just start a new business because they want to capture all the use-cases of its platform. The way to do this is always partnering, which indeed is happening.
The best startups are not formed by ideas but by teams. A brilliant team can execute a not so good idea way better than a not so good team executes a brilliant idea.
The founders started out with a startup for hyperlocal fashion, basically Swiggy for fashion. Didn't work. Realised fulfilment was probably 3rd on the list of what consumers thought while buying fashion online. The 1st thing is a variety of selection, which you can't have around you.
The good thing that came out of it was it became a starting point, so when they were trying to build this fashion marketplace, they used to go to these small shops in Bangalore and try to onboard them as suppliers.
Their pitch used to be "Hey we are gonna take you online" and these guys will say we are already online, then they would tell "we already sell on Whatsapp".
So they would create a deeper understanding by talking to them. These small shop owners would say "I have a Whatsapp grp of all my existing customers and every time new stock comes, they would take a photo and circulate in those groups and tell them hey these are the products left with me if you wanna buy, you order now". This guy said he used to sell 30-40% of his business every month now on WhatsApp.
They then met with a number of other small shops and saw the same behaviour. The good thing was no one in India knew about this and this felt like an idea they should pursue.
So they built a small product which was like "mobile-only India localised version of Shopify tailor-made for doing commerce on Whatsapp"
Started going to all small sellers and say "I know you sell on Whatsapp use this tool".
The product started to grow very well, but after 6 months they noticed that majority of customers using the app were not these small shop owners but women based out of Gujarat who were running these online boutiques. These women would themselves go out, contact to suppliers, get products from them, curate them and sell to the customers online, and when they get an order, they would collect money and give it to the supplier minus the commissions and ship the product to the customer.
That's when the founders realised "If every person in India was able to start a business like this, it would be very powerful"
They thought people were going to use it in one way but they were using it in another.
So they now separated the product into two, one what they intended people to do called Meesho and the other what these women were doing and called it Meesho supply.
So having already built two apps, they weren't going to build one more app again for this new thing. They just went ahead and started operating on only Whatsapp, while trying to create a supply chain in the background.
They found that this product was growing 2x every month without any app any website, just on Whatsapp.
The other product was still going at the same normal pace.
They now felt that they can't do two businesses. So they had to choose between them and the task was easy as one business was able to make money - Meesho Supply for the commissions obtained from suppliers and the other was just not making money.
And seeing the obvious that one business running only on Whatsapp was doing so superbly, they knew if they built an app around it, it will be successful. Pivoting was the key here.
Most people build products from themselves, to cater to problems that they are facing, but for the founders of Meesho, it was different.
The best thing is to make a product that solves your problem. The second best thing is to build a product for someone who can't solve their own problem.
If you are building for an audience which you yourself are not, then you need to stay close to this audience.
The day you start making assumptions for the users and start thinking this is how it should be, you start making mistakes.
The problem you are facing isn't always the first time someone is facing this. so if you have a network of people who are in the same battleground as you, you can reach out and ask for solutions, because more often than not they have faced the same issue themselves before.