Meesho hints at IPO in 2025; focus shifts to generating profits

 Meesho, an electronic commerce platform, would be looking for an initial public offering only in 2025. They were introduced in 2015 by two IIM Delhi graduates. The app is supported by marquee investors like Softbank Media and Meta Platforms. Top sources in the company have stated that the group's current focus is on generating profits after tax and not solely on earnings before interest and taxes (EBITDA). The corporation, which is open to a new change in strategy, is now aiming to lower its yearly sales growth target from 100% to 40%. According to some, the growth rate is larger than that of other e-commerce platforms. An rise in revenue over time is referred to as revenue growth. Prior to implementing the new approach, the corporation concentrated on reducing its cash burn by 25%. When a corporation is not producing more money than it allocates, it is said to be burning through its cash at a rapid rate. The burn rate is a measurement of how quickly a business uses up its cash on hand.

In the financial year 2022, Meesho saw a steep rise in its loss by seven times, which amounted to Rs.3247 crore, but its revenue showed a rise by four times, which amounted to Rs.3232 crore only. Meesho's cash in the bank is nearly $570 million, which makes the company valued at $4.9 billion. The interest from that money is sufficient for the company, and a requirement for the new shares won't be needed, said the sources. Around 10 per cent of the transactions whose average ticket size is Rs.350 are made by this startup company. They have also made certain offerings to their merchants, such as short-term credits and insurance on returned orders. This would give them an additional 1-3 per cent in their overall margins, and providing these offers to their 1 million merchants would help in earning the trust and loyalty of merchants to their startup. However, based on the time taken to scale up, the offerings will be provided to merchants as separate financial services. E-commerce Giants like Flipkart and Amazon are moving to Tier 1 and Tier 2 in cities where Meesho is reigning. This is mostly due to Meesho's contrasting strategies compared to other players in the market. However, the other players are also serving different segments, and their ticket sizes vary by 4-5 times compared to Meesho, so that they are able to serve their premium customers. Ticket size refers to the total amount a customer spends in one visit. Meesho's gross merchandise value is often clothing and lifestyle, whereas on other platforms, mobile phones contribute to their gross merchandise value. The reason Meesho doesn't adopt mobile phones is that the margins are very low compared to others. Along with that, Meesho is also trying to reduce its delivery time by one day each year.