E-commerce startup Meesho turns profitable in July
Meesho, the low-price e-commerce platform, achieved profitability on a profit after tax (PAT) basis in July 2023, according to the company’s Chief Financial Officer (CFO), Dhiresh Bansal. The achievement was attributed to several factors, including reduced customer acquisition costs (CACs) and improved monetization efforts.
Lower customer acquisition costs mean that the company spent less money on acquiring new customers, making its operations more cost-effective. This can be an essential factor in achieving profitability as it allows the company to increase revenue without a proportionate increase in expenses.
Additionally, Meesho’s efforts to enhance monetization likely contributed to its improved financial performance. Monetization refers to the process of generating revenue from its platform, which may involve various strategies such as advertising, commissions on sales, subscription fees, or value-added services.
By implementing efficient customer acquisition strategies and enhancing revenue streams through better monetization, Meesho managed to reach a profitable position. This accomplishment can be significant for the company’s growth and sustainability in the competitive e-commerce market.
As Meesho continues to optimize its operations and business model, it may further strengthen its position in the market and attract more investors and customers. Achieving profitability is often a crucial milestone for startups and companies in the e-commerce industry, demonstrating their ability to generate sustainable returns and drive long-term success.
Since the start of the year, Meesho has been taking significant steps to improve its financial health and achieve profitability. As part of its cost-cutting measures, the company carried out a second round of layoffs, leading to the termination of 251 employees from its core unit. Reducing the workforce can help optimize operational costs and streamline the organization’s structure.
Furthermore, Meesho has focused on reducing cloud expenses, managing to bring them down by approximately 50 percent. Cloud expenses often form a significant portion of technology-driven companies’ operating costs. By optimizing its cloud usage and adopting cost-efficient strategies, Meesho was able to enhance its financial position and move closer to profitability.
These efforts to cut costs and streamline operations are typical strategies employed by startups and businesses seeking to achieve profitability and sustainable growth. Such measures enable companies to allocate resources more effectively and drive greater efficiency across their operations.
By implementing these cost-cutting initiatives, Meesho has demonstrated its commitment to building a strong financial foundation and securing its position in the competitive e-commerce market. Achieving profitability is a significant milestone for the company, and these measures are likely to have contributed to its success in this direction. As Meesho continues to optimize its business and financial strategies, it can position itself for further growth and success in the dynamic e-commerce industry.
While Meesho’s Chief Financial Officer, Dhiresh Bansal, did not provide specific numbers, it has been learned that the company’s Profit After Tax (PAT) in July was in the low single-digit range in crore rupees. This indicates that Meesho managed to achieve some level of profitability during that period.
However, the profitability achieved was on the back of revenues worth approximately $400 million (around Rs 3,280 crore) generated between January and June. This suggests that the path to profitability for Meesho is still likely to be challenging and may involve navigating through potential obstacles.
The e-commerce industry is known for its highly competitive and dynamic nature, where companies often face significant operating costs and marketing expenses. Achieving profitability in this sector can be a complex process, especially for startups and growing companies.
Despite the recent progress in achieving profitability, Meesho may still need to undertake further efforts to sustain and improve its financial health. This could involve optimizing costs, exploring new revenue streams, enhancing operational efficiency, and continuing to adapt to market dynamics.
While Meesho’s journey towards profitability may have some bumps along the way, the company’s focus on cost-cutting measures and financial optimization signals its commitment to achieving long-term sustainability and success in the e-commerce market.
Meesho, the Bengaluru-based startup, has reported a significant increase in its revenue over the last twelve months, with a growth rate of 54%. This growth has been driven by an increase in order volumes, reflecting the company’s success in attracting more customers and sellers to its platform. While specific revenue figures were not disclosed, the company highlighted the positive trend in its financial performance.
Meesho generates the majority of its revenues from the logistics services it provides to sellers on its platform. This includes warehousing, order fulfillment, and delivery services, which contribute significantly to the company’s top line. Additionally, advertising revenues also play a role in the company’s overall financial performance.
Looking ahead, Meesho has ambitious plans for its future. The company has expressed its intention to aim for a public listing within the next 12-18 months, provided the market conditions remain favorable. By going public, Meesho aims to raise capital and gain access to a broader pool of investors.
However, Meesho is also mindful of its financial trajectory and profitability. The company has indicated that it does not require significant amounts of primary capital and is focused on maintaining a profitable path for a reasonable period before proceeding with the public listing. This approach reflects the company’s commitment to building a strong financial foundation and ensuring long-term sustainability.
Overall, Meesho’s growth in revenue and its plan for a potential public listing underscore its position as a prominent player in the e-commerce market. By leveraging its strengths in logistics services and advertising, the company aims to solidify its position in the competitive industry and continue its growth journey.
