Meesho could launch IPO in 12-18 months
Bengaluru-based e-commerce start-up Meesho is considering an initial public offering (IPO) within the next 12 to 18 months. The SoftBank-backed company recently recorded its first-ever profitable month in July. Dhiresh Bansal, Meesho's chief financial officer, told Nikkei Asia that Meesho will consider public listing "should the market situation remain benign." The firm experienced a 40% YoY increase in revenue in the first half of this year, reporting over $400 million.
Surge in revenues and cost cuts helped Meesho
Meesho's aim is to remain profitable in the lead-up to the IPO, Bansal said. A surge in revenues and cost cuts helped the company become profitable. By the end of the year, Meesho expects to cross $800 million in revenue. Meesho has improved its operational efficiency through an 80% reduction in customer acquisition costs and marketing spending, as well as a 60% decrease in technology costs. It is still the most-downloaded shopping app in India.
Meesho attracted sellers by scrapping commission
Meesho has raised around $1 billion so far. To take on bigger rivals like Amazon and Flipkart, the company scrapped the commission it charged sellers. Instead, it charges for logistic services and advertising. The start-up funding crunch forced Meesho to cut costs by axing about 250 employees, shutting down its grocery business and stopping discounts. However, small merchants are still not required to pay commissions on the platform. On the other hand, the firm charges bigger sellers a 5% commission.
Biggest rivals are offline stores: Meesho
According to Bansal, the initiatives helped Meesho achieve profitability "a quarter or two ahead of the timeline." He said Meesho's biggest rivals are not online stores but brick-and-mortar shops. "The competition is from offline alternatives and how people think about changing their buying habits," he said. "Our aim is to offer a value proposition to our customers which is better."
