Since 2018, Surat-based homemaker Pooja has been working as a reseller with social commerce application Meesho sourcing unbranded clothing for women and kids from suppliers through the app, and selling it to her friends and relatives through WhatsApp. Pooja had built a robust clientele taking at least 40 orders a day, and earning nearly Rs 60,000 every month. Her stellar sales record fetched her the “emerging reseller” award in 2019, where she was one of 11 women in Gujarat to be conferred the praise by Meesho at an elaborate ceremony at a leading hotel.
“I was surprised and beyond thrilled,” Pooja, 34, told Entrackr, requesting to be referred under a pseudonym. “For a year I didn’t hear from Meesho, and then suddenly they called to tell me I am selling well, and they want to give me an award.”
Pooja had become financially independent. But the past 6 months have been an undoing of her hard work of four years.
She says she has lost almost all her customers after Meesho shifted its strategy, selling directly to customers in 2021. Consumers can now order the same products at a discounted price on the Meesho app compared to the price Pooja offered which included her margins. She’s now being confronted by angry friends and relatives who feel cheated. “Many people have asked me why I was charging a commission,” Pooja said. “It’s been embarrassing and I am not able to face them now.”
Entrackr spoke to a dozen resellers from across India for this article. Female resellers on Meesho who leveraged familial relations to sell products to relatives stand accused of taking them for a ride. “I had many regular customers including people from my big group of friends from the society,” Pooja said, and relationships have soured with many of them. Pooja now places fewer than eight orders a month on Meesho, compared to the 1200 monthly orders in the past.
Facebook-backed Meesho started out as a social commerce platform in 2015. CEO Vidit Aatrey often repeated their grand promise of Meesho empowering Indian women and making them financially independent by giving them opportunities to be an entrepreneur with zero investment. “These are first generation women entrepreneurs leading the social commerce revolution in India,” Aatrey had said in 2020.
Everyone bought this narrative: investors, the media, and most of all, the resellers. But in mid-2021, the company suddenly switched tracks and decided to become an e-commerce platform by going to the customers directly, cannibalising the businesses of 15 million, mostly women resellers. Contrary to assertions on female empowerment, women resellers feel Meesho has robbed them of their livelihood, after offering sustained earnings for years. Today 75% of Meesho’s revenue is from direct selling. “Their focus on resellers has come down. It looks like they don’t care about us anymore,” Pooja said.
Forty-eight-year-old Anita from Gurugram has been a reseller with Meesho since the “app was available in the Play Store.” As one of the early adopters of smartphones in her family, she was scouting for ways to make money through the internet and stumbled upon Meesho as an option to do exactly that. Her initial years as a Meesho reseller of handicrafts and women’s wear fetched her high income and even propelled her to become one of the best resellers on the platform.
These days she has abandoned ordering on Meesho entirely because of a drop in the quality of products procured from their army of wholesalers. “I think Meesho added too many sellers during the lockdown,” said Anita, requesting to be referred under a pseudonym. “The quality of their products is so bad that I first order for myself before getting it for my customer.”
The decision to sever ties with her biggest income-generator, however, became stronger after she received taunting calls about sourcing and pricing from regular customers.
“Since one year, whenever the courier delivery person reaches the customer with the product, they don’t say the package is from me, they say it’s from Meesho. This never happened earlier,” said Anita. “Many of my regular customers even called and laughed saying they have started buying from Meesho directly. It was very insulting to me.”
Numbers also tell a similar story: Meesho had claimed to have become the most downloaded app globally in October 2021 with 57 million app downloads from August to October.
Experts tracking this space cite a range of reasons from difficulties in scale, to challenges of quality control for Meesho’s shift in focus. “The reseller business was limiting them. They could sell limited unbranded products, couldn’t get into groceries or other branded products. Also, there was an overlap, resellers within the same region selling to the customers,” said an analyst in the space familiar with Meesho’s business model, requesting anonymity. “It just didn’t work as a business.”
Further, sources said, Meesho plans to expand its direct sales from 75% to 97% in the next two years. This is despite the company becoming a leader in the social commerce segment, raising funds from big names such as Naspers (now Prosus) and Facebook (now Meta), among others. “When Meesho started 6-7 years back, the [ecommerce] market was dominated by Flipkart and Amazon,” said Satish Meena, a former analyst with Forrester. “For Meesho to raise funds in that scenario, they needed a different story. At the time, social commerce was growing very aggressively in the Chinese market, so social commerce seemed like a good story to sell.”
In response to a detailed questionnaire sent by Entrackr, a Meesho spokesperson said, “Meesho pioneered the reseller model at scale in India. Through our 15 million entrepreneurs (resellers), we continue to address a large part of population in India (~400 million), which is online but doesn’t transact directly.”
Meesho said that a majority of their resellers are women, who are able to add to their household income. “External estimates suggest that we have 95% market share of the online reseller market. The GMV for these resellers has more than doubled in the last year, as the assortment available on the platform grew,” added the spokesperson.
The company further said, “Some e-commerce companies in India have tried to copy Meesho’s social commerce model and recently launched an app to enter into the reseller market. However, they could not get the fundamentals of the reseller model right, and based on their actions, have been forced to switch to selling directly to customers.”
Meanwhile, the resellers Entrackr spoke to are adapting. Many have cut down on sharing product images from Meesho’s catalogue because they’ve noticed that customers are using the “search by image” feature on the app, and buying directly from Meesho. Pooja has now started cultivating direct relationships with manufacturers in her city.
It’s not as lucrative as Meesho was during the early years, but it gets her by without complicating relationships with friends and family. “I only share pictures of [local manufacturer] products with whatever customers I have left,” she said. “I use Meesho to only order for myself, not for business purposes.”
By going directly for its reseller’s customers with the same products with its pricing power, Meesho actually seems to have gone one step further than the worst accusation against the e-commerce majors. Of learning from the buying behaviour of the customers and launching their own brands in relevant categories. Perhaps it should be thankful that its resellers have not really organised themselves, or this could have made for a very interesting case for abuse of market power.
