Asset manager Fidelity, angel investor Eduardo Saverin’s B Capital Group, venture capital firms and existing shareholders have infused more funds into the Indian social e-commerce platform Meesho, which is also backed by social media giant Facebook.
In social e-commerce, sellers connect with buyers using social media platforms such as WhatsApp, Facebook or Instagram, and goods are then sold via the platform.
Fidelity Management & Research Company, Saverin’s B Capital Group, US-based Footpath Ventures, and India-focused funds Trifecta Capital and Good Capital have joined existing investors Prosus Ventures, SoftBank Group’s Vision Fund 2 and Facebook to inject $570m into Meesho.
The investment – the largest funding round to date – more than doubles Bengaluru-headquartered Meesho’s valuation, which has now shot up to $4.9bn, as mentioned in a statement by the e-commerce firm.
Reaching the underserved
Using the Meesho platform, suppliers can sell home appliances, clothes and footwear, among other goods, to resellers, who then hawk the goods to customers. Over 75% of its users hail from India’s remote, smaller cities and towns, which are otherwise underserved.
The Meesho application, sized at just 12MB, has been designed to accommodate “low-end smartphones and low-internet bandwidth”, according to the statement. It also makes use of artificial intelligence (AI) to “optimise user experiences and have a proprietary ML [machine learning]-driven demand forecast”.
“Our industry-first 0% seller commission has completely revolutionised how small businesses transact online,” Meesho founder and chief executive Vidit Aatrey commented.
“Since then, we have onboarded 10X more sellers who continue to serve customers across the country. By reaching customers in the remotest corners of India’s hinterlands, we have truly become the preferred e-commerce destination for Bharat,” Aatrey added.
Expanding market and new pitfalls
There are over 340 million social media users in India, accounting firm GrantThornton said in an article published in August. With over 180 million users, India has more Instagram users than both the US and Brazil combined, making it the second-largest social media user base in the world after China.
The potential for social commerce in the country is huge, given that just about half the nation has internet access. As such, the social commerce industry, which has grown by some 65% a year, is expected to hit $16bn–$20bn by 2025, the article projected.
However, operators still have to address the issue of online fraud as they expand, particularly in the wake of Covid-19. Customers lost $117m to social media fraudsters in the first six months of 2020, with account takeover attempts jumping some 179% during the pandemic, the article stated.