Meesho has turned into a poster boy of social commerce in India because of its quick growth in smaller cities where mainstream e-commerce companies are yet to make a strong inroad. The growth of the company could also be gauged from its 1200% leap in revenue in FY19.
But quick growth often comes with a high burn and Meesho is no exception. The firm’s losses ballooned by 20 times in the last fiscal as compared to FY18.
The Facebook-funded firm has recorded over 13X jump in operational revenue to Rs 80.3 crore in FY19 from mere Rs 6 crore in the preceding fiscal. Other incomes (from profit on sale on investments and interest on deposits) rose by over 1,000X to Rs 4.8 crore from Rs 45,546 in FY18.
The jump in other income is quite natural as the company spent Rs 547.61 crores on purchasing investments (mutual funds et al) during FY19. Such income was only Rs 8.5 crore in FY18. It also sold investments worth Rs 355.65 crores during the year ending March 2019.
As far as components of operational revenue are concerned, the company had made Rs 41.14 crore (approx 51.5% of overall revenue) through commissions while shipping fee contributed Rs 36.78 crore (46%) to the total revenue pool in FY19.
Interestingly, Meesho spent Rs 76.9 crores on logistic services, losing as much as Rs 40 crore in providing shipping services to the partnering sellers.
The company has been burning cash incessantly in pursuit of scale and has spent Rs 185.3 crore in FY19, a 17X jump from Rs 10.97 crore from the previous fiscal. The net losses recorded at Rs 100.42 crore, rising more than 20X in FY19 as compared to the last fiscal. To drive sales, Meesho ended up losing money at the rate of 125.47% during the last fiscal.
Reseller bonuses have accounted for expenses of Rs 30 crore in FY19 as compared to only Rs 68 lakhs in FY18. Moreover, Meesho spent whopping Rs 21.1 crores on promotion and advertisement, a 20.5X jump in contrast to the preceding fiscal.
As company has been hiring to keep up with the growing scale, its total employee benefit expenses also grew 8.76x from Rs 3.6 crore in FY18 to Rs 31.54 crore in FY19
Another Rs 1.07 crore were recorded as miscellaneous expenditure but were not explained in the annual report filed with the Registrar of Company.
Since November 2018, Meesho had raised $175 million from the likes of Facebook, Naspers and Shunwei, DST Partners among others. The company claims about 45% buying base is non English speaking users with 2 million resellers on its platform. Shop101 and Glowroad, Dealshare, Mall91 are other notable startups in the social commerce space.