Mohit's Acquisition Project | Meesho

Disclaimer: I joined Meesho as a Senior Growth Associate on June 3, 2024. While I have a broad understanding of the industry and company through available online resources, my involvement in the Acquisition project is aimed at developing a framework for a mature-scale company as more context becomes available, supporting full-time work. Much of the data used in this project is derived from secondary research and limited internal data, and any assumptions made are clearly outlined to clarify the reasoning behind the design of specific channels.

🛍️ Introduction

Industry Context

E-commerce in simple words, is online commerce, helping connect a business to a huge geography with limited resources and no restrictions like buying premium real estate or limited business hours. While Indian e-commerce was captured by players like Amazon and Flipkart, with a huge selection of products across multiple categories, e-commerce in India evolved with new kinds of e-commerce, as we see today. The future of Indian e-commerce is developing with different kinds of users looking for varied experiences best suiting their buying power and interests, and this led to the emergence of multiple types of e-commerce segments, i.e., Quick Commerce, Hyper-value Commerce, Inspiration-led Commerce, and Fast Fashion Commerce.

• Quick Commerce focuses on rapid delivery of products, in under 30-minutes and is an urban phenomena wherein Metro and Tier-1 cities contribute nearly 80% orders, and is growing into multiple segments like Health & Fitness, Baby-care, Sports, etc.
• Hyper-value Commerce focuses on users with limited buying power, looking for maximum value per rupee spends, and are not looking to compromise on the number of options available, which is targeted towards the low or low-middle class population of India.
• Inspiration-led Commerce focuses on live commerce via Social Media catering to a user base inspired by their influencers and are making buying decisions based on content and reach. Though it hasn't matured yet, it is growing rapidly.
• Lastly, Fast Fashion Commerce, as the name suggests focuses on the upcoming generations (GenZs and later) providing access to new SKUs in the Fashion segment, to help them stay in touch with the current trends (on Social Media), and is channeled towards all kinds of buying consumers.

A few statistics to help understand the depth of e-commerce in India:

1. Indian e-commerce is valued at $70 Billion (as of 2023) and is poised to grow to $325 Billion by 2030.
2. India's online spends are just 5-6% compared to offline retail, providing more headroom for growth.
3. 7/10 shoppers in India are from Tier-2 and beyond, 1/3rd are GenZ, and 1/3rd belong to the low or low-middle class population.
4. 2/3rd sellers in India are from Tier-2 and beyond, and 3/4th operate in categories like Lifestyle, Home, and Electronics.

Meesho (Products, Reviews, & Description)

Meesho is the third largest horizontal e-commerce app and has also become the largest shopping app in terms of installs. Meesho's goal is to "Democratise Internet Commerce for Everyone", and is built on a 0-commission model. It focuses on the Tier-2 and beyond audience of India, specifically catering to low and low-middle class income groups. It prides itself in being different from Amazon and Flipkart, with it's focus on the 'Bharat' user and allowing affordable unbranded (and branded) products provide access to the customer looking to derive maximum value per rupee spent, by delivering on hyper-value commerce, as mentioned.

• The brand has pivoted multiple times to find a viable business model and in a matter of some years has gone from a B2B app for shop owners selling clothes & fashion accessories to an online e-commerce app selling fashion, accessories, home and electronics, among others. It has a 3-face business model catering to Suppliers, Resellers, and Customers.
• As explained about the hyper-value commerce consumer, Meesho's customers are extremely price sensitive, and value money over convenience. Hence, unlike Amazon's or BlinkIt's audience demanding faster deliveries, Meesho's audience demands affordable products, even if delivered 5+ days post order.
• Understanding the user, market and Meesho's positioning, it was found that Meesho is #1 in mindshare (TOMA) among women in Tier-2 and beyond cities of India. This was validated across multiple cohorts with the total awareness remaining consistent, interestingly, this TOMA hasn't aided purchase frequency or consideration posing difficulties with the LTV of the users on the platform. Though, resellers and women audience is presently dominating the company's purchase behaviour, another challenge lies in acquiring more male users and young audience.

Current Marketing Strategy

Meesho's history of evolving from a B2B to a B2C company has been transformational with their initial pitch to create a large Supplier <> Reseller network to now involving Customers to it's fold. With earlier campaigns targeted towards their B2B audience, the B2C audience loop was closed with remarkable campaigns like "Sahi Quality, Sahi Price", "#HowISell", among others, was used across multiple channels which was targeted towards multiple ICPs the company serves.

Secondly, their Indian competitors like Bazaar, Shopsy, Snapdeal rank considerably lower on SEO and other online sites, as the company has a strong indexation for keywords like trendy, cheap, under Rs. 100, etc., hence, at mature-scaling stage, the onus lies on their next goal, conversions.

🌏 Customer & Market

Understanding Meesho's ICP (Ideal Customer Profile)

Influencing Buying Decision

As we know, the buying decision is based on 3 components of the equation (Buying Decision = Buyer + Influencer - Blocker), and in Meesho's case, the influencer and blocker are detailed below.

1. Influencer - Influencers in helping make a buying decision are social nudges, i.e., content, validation, peer groups, led by their hope of receiving this validation post purchase.
2. Blocker - Blockers in their buying decision are offline available options, disregard for a specific kind of things, trust, payment offers, or prices outside of Meesho.

Market Opportunity & Core Value Proposition

As per the estimates reported by ETTech, India has about ~820 million active internet users, with I-Cube estimating nearly ~300 million e-commerce users. Based on the segmentation of Branded E-Commerce (like Amazon, Flipkart), Quick Commerce, Fast Fashion, and Inspiration-led Commerce, the user segmentation of Meesho's core audience, i.e., Hyper-Value Commerce, we estimate it belongs to the one using smartphones (with access to internet), and belonging to the low or low-middle class income groups in Tier-2 and beyond locations. For more accurate estimates of SAM, we will downsize the population which does not use smartphones, belongs to extremely low and high income groups, or an audience with affinity towards a specific category/brand, concluding to nearly 650 million people. Note that, to identify the market opportunity across the listed ICPs, based on internal data available, we found that an approximate of 200 million users is our audience to be catered to, where the brand recall is high, the PMF is established strongly, and can help snowball a large frequency of orders post the 1st one, based on mapping their psychographics.

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Basis the ICPs defined and the users listed, we can categorize them into 2 kinds:

1. Highly Price Sensitive (~140 million people) - Though specified for Male audience, this follows across female customers too who are highly price sensitive and are looking for specific SKUs. This audience, while being on Meesho, still stands as a great opportunity to tap into, which can be lured in through Deals, Cashbacks, Discounts, or Points, basically, anything that helps them feel that they’ve got a steal deal. This was also identified, as a lot of customers wait for a price drop or offers on their preferred payment modes, to make the purchase decision.
2. Trend Follower and Influencer (~60 million people) - With Meesho encouraging social commerce, it was seen that a lot of housewives were reselling fashion and lifestyle products through their WhatsApp groups, with their inventory replenishing daily, and one of the segments of Meesho is it’s Resellers. Understanding the influence they have, they consume and resell products on Meesho, and are constantly on the lookout for new designs, trends, and collections to brag about.

🪄 Acquisition Channels

As per GrowthX's detailed analysis of Meesho, the acquisition strategy has a multi-channel reach out to target their audience, however, Meesho's strategy was based on their growth of acquiring as many eyeballs as they could, which included celebrity campaigns and IPL ads, however, with great TOMA built, it's time for them to move over to getting these users to transact on the platform, and snowball this effect across their social groups. As per the current system, the goal is to facilitate "first successful transaction" and onboarding their social groups on the platform. For the same, understanding the best way to scale these funnels, here's a 2 step acquisition channel for the same:

1. Targeting new users by improving funnel conversions via Performance Marketing ads on Social Media, building vested interests in a product. Upon targeting the most relevant products available to trigger a 1st sale (through Deals), CAC can be reduced.
2. Referral Loops via SmartCoins helping premarket products who would've completed their 1st transaction and snowballing the same product first discounting approach to lure them into buying.

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Content & Product-led Ad Campaigns

The problem at hand is to be able to focus on acquiring users and nudging them to complete their first transaction on the app, i.e., first order. While there have been multiple campaigns which have created brand awareness, one of the things tried out by other horizontal e-commerce players was to introduce products as ads on multiple platforms like Google Ads, Meta Ads, Snapchat Ads, which could acquire a transacting user, by making the loop small.

However, this strategy had it's ups and downs, as the audience segment targeted by Amazon and Flipkart is entirely different than that of Meesho's, where Meesho's customers are price-sensitive and FOMO driven. For this, Meesho has a category called Deals (or Daily Deals), wherein heavily discounted products are available for a limited amount of time and the assortment is entirely refreshed.

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To help build content and product led effective ad campaigns, here's the chronology:

1. Bucketing trends and tracking them based on multiple ICPs/regions, assuming that buying behaviour shall remain consistent based on regions.
2. Upon bucketing those trends, using metadata available on platforms, categorising the assortment (product SKUs) for Daily Deals to be uploaded as product-based ads on Social Media platforms.
3. Triggering relevant products with content on Social Media, through their Home-feed/Story ads, as well as utilising other aspects of Meesho's FOMO creating module, including timers, out of stock banners, among others to help close this loop.
4. Additionally, there could be internal routing on the Meesho app, to their Social Media handles, portraying wide range of products, based on the Super Market psychology, to show flashy, high-margin, unnecessary items to trigger higher AOVs, or order frequency.

The hypothesis here was to trigger a transaction to both the ICPs listed, which are driven by clear messaging (Best Prices, Great Products), easily comprehendible by the targeted user (Products from Meesho, available for limited time), be relevant to the business goal (DICE or building commerce for the Bharat user), and lastly clear CTA (Purchase now). Segmenting audiences allows for personalized content and improved efficiency but also increases CPM and limits campaign learning, causing inefficiencies. We need to find the right segmentation level for optimal efficiency. The experiment's success will be measured by the 1-day conversion rate at the same CPI.

Referral Loop via SmartCoins

Another acquisition strategy to reach the ideal goal of acquiring a transacting user could be met with the content and product led strategy, however, one of the more interesting channels for Meesho can be it's referral loop. How you ask?

Well, as you know it is based on the idea of social commerce, wherein network groups have had similar purchase behaviours, and in Indian context, we'll categorise it based on 3 factors, i.e., influencer platform currency for price sensitive customers, higher stakes for repeated referrals, and social validation.

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If you're not aware, Meesho launched SmartCoins, a loyalty based program (currently in testing phases across multiple cohorts) to increase repeated orders, wherein every SmartCoin is qual to INR 1, which acts as a discount on the customers next order, however, one experiment proposed is to scale this program and tie this to a referral loop.

The referral loop starts with the existing customers's orders, wherein they're provided with loyalty benefits as SmartCoins. With more orders placed, a referral chain will be nudged on the app through a 100 SmartCoins offer for 1st successful referral (success in this case is when the referral receiver completes their first transaction). Once done, these coins act as discount points, as well as allow them to be a part of "Bachat Bazaar", providing more offers on a few SKUs or once in a while exciting giveaways.

The loop continues, helping limit the spends of CAC, considering referral loops are stronger, as word of mouth stands the test of time, doesn't it?

fin.