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How Meesho plans to leverage the power of 3PL to double its shipments by next year

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Internet commerce firm Meesho eyeing to become the biggest e-commerce contributor in terms of shipments looks to leverage third-party logistics (3PL) players such as Shadowfax, Ecom Express, Delhivery, and Xpressbees.

Through 3PL players, Meesho looks to more than double the number of its shipments to over 1.2 billion for FY 2023, and become a major e-commerce player which uses 3PL platforms ahead of Amazon and Flipkart, who also use 3PL platforms for some portion of their shipments.

Run on an asset light model, Meesho which counts Shadowfax, Ecom Express, Delhivery, and Xpressbees among its key 3PL partners is already accounting for about 35 percent of all shipments delivered by national third-party logistics (3PL) players.

In an interview Sourabh Pandey, CXO, fulfillment and experience, Meesho said “Last year, (end) of the quarter, we grew almost 5x in terms of order volume. That has led us to become the single largest contributor to the end-to-end third-party logistics (players).”

Meesho’s rapidly growing scale has been a key driver behind the expansion of the 3PL sector. Average daily orders on Meesho have risen nearly five-fold YoY to 2.4 million in January-March 2022.

While volumes in India’s 3PL industry typically peak during the festive season, in line with the seasonality observed in e-commerce. Meesho has continued to grow its 3PL shipments by 16 percent in January-March on the already high base of the previous quarter (October-December 2021).

A major reason behind this steady growth of the internet-commerce firm is their sale events which spread throughout the year and help Meesho see the numbers grow month-on-month.

With India’s unorganized retail sector estimated to reach $792 billion on the back of digitization, Meesho has the vision to enable 100 million small businesses.

In September last year, the e-commerce firm raised $570 million from investors including Fidelity Management & Research Company, B Capital Group, a venture capital firm co-founded by Facebook co-founder Eduardo Saverin, Prosus Ventures, SoftBank Vision Fund 2, and Facebook. Following the fundraiser, the company’s valuation more than doubled to $4.9 billion in less than five months.

Meesho in Q4, 2022 was over 100 million times, taking the overall active user base up by 70-80 percent year-over-year.

Furthermore, Meesho is now betting big on unlocking the Tier-2 and Tier-3 markets as well as rural India. “A lot of our growth is coming from these markets and now we are also entering rural (India) to a great extent.”

Helping Meesho achieve this record growth is its partnership with the 3PL providers.

Pandey said any logistics network that has been built in-house only covers 50-60 percent of India’s pin codes and not larger parts of India and that is why Meesho is dependent on the 3PL players.

“We did not feel the need to reinvent the wheel,” said Pandey. “They (3PL) are bringing economies of scale and expertise. We strongly believe that this ecosystem (3PL) can do a better job than any (inhouse logistics) network.”

As per experts, outsourcing logistics to a 3PL provider is cost-effective, gives access to cutting-edge transportation solutions, and enhances scalability, flexibility, and customer satisfaction. It also allows companies to focus on their core competencies. At the same time, the increasing popularity of 3PL services has generated thousands of jobs for the country’s blue-collar workforce.

Source: Business Standard

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