- Did you know? Meesho ships upwards of 3 million orders a day, but we do not own warehousing or logistics. This helps us ensure that our sellers get the most cost-efficient online selling experience.
- For any e-commerce platform, logistics is a huge expense. But at Meesho, we worked our way around them by tying up with specialised e-commerce logistics players across India.
- Our asset-light business model allows us to leverage our logistics partners’ cutting-edge transportation solutions, thereby improving our scalability, flexibility and customer satisfaction.
- Our tech-first approach further optimises our logistics partners’ core competencies and by extension our own business model. For example, using API integration to help the seamless interaction of our respective networks, and developed systems to optimise their legacy machines.
- With our users displaying a strong value orientation, our efficiency-over-urgency approach to logistics helps bring down costs on both the seller and the user side.
Third-party (3PL) logistics players in India handle 1.8 billion shipments annually.
Can you get what percentage of that Meesho accounts for?
That makes us the single-largest contributor to India’s fast-growing 3PL ecosystem. We ship upwards of 3 million orders a day, but we do not invest in in-house warehousing or logistics.
To ensure that our sellers have the most cost-efficient e-commerce experience. Building warehousing infrastructure and running a captive logistics workforce drives up expenses significantly in the supply chain, ultimately translating into higher costs for fulfilment as well as products. In fact, this choice of outsourcing logistics is a key lever in establishing our industry-first 0 commission model.
Why reinvent the wheel when specialised 3PL companies with deep capabilities cover the length and breadth of the country?
So far Indian e-commerce platforms in India have only been able to achieve an average capacity utilisation of 60% with in-house logistics. Plus, logistics — a combination of first-mile, middle-mile, and last-mile costs — is a huge expense.
Our decision to work with 3PL players across India, including Delhivery, Ecom Express, Xpressbees, Shadowfax, has led to increased supply chain efficiencies across the ecosystem, resulting in higher truckload utilisation, more fuel saved per tonne, far less carbon emissions, and a significant decline in the average cost per shipment.
Meanwhile, thanks to the sheer volume of orders placed by Meesho users, we not only receive favourable pricing opportunities with 3PL players, but we are also able to realise supply chain efficiencies, enjoy best-in-class delivery times and service quality.
As veteran brands in the logistics space, these 3PL players have developed deep last-mile networks from the customers’ perspective and first-mile nodes from the sellers’ perspective. Plus, they have cracked the code of logistics not just in tier-I cities, but also in tier-II, tier-III cities, and notably in remote regions such as Northeast India. This translates to our sellers having access to all serviceable pin codes across the country, with the agency to run their online business in remote markets at lowest possible costs.
Essentially, our asset-light business model, allows us to leverage their cutting-edge transportation solutions, thereby improving our scalability, flexibility, and customer satisfaction. Here’s how our tech-first approach further optimises our logistics partners’ core competencies and enables our sellers to get better pricing and services:
Integrating our tech with that of 3PLs
Our tech in the backend works as a translator that scans all the nodes within a 3PL partner’s network and pushes out relevant information about pickup and delivery into their demo pools. Meanwhile, our “Dynamic Allocation Engine” allows us to analyse and ensure that every shipment is processed by the 3PL partner that can offer the best cost and service quality.
Extending our tech efficiencies to improve utilisation at 3PL partners
In a recent example, we made the functioning of sorters — a device that is used in logistics to identify products and divert them into specific destinations as per requirement — cost-efficient. The typical run time of a sorter is 8 to 10 hours, which means this machine is on standby for more than 12 hours every day... which translates to loss of money. We developed a system to increase the runtime of the machine to 14-16 hours, which has made things more efficient and spread out the load for the machine.
Data science to reduce RTOs
RTOs come at a big cost in the ecosystem; think forward and reverse logistics, probability of damage, repackaging, stuck inventory, etc. We work very closely with 3PL companies to reduce these costs. For instance, our SaaS technology has in large part resolved a big issue in tier-II and tier-III cities, where pipal ke ped ke peeche and atta chakki se left are common address markers.
Further, we built a very strong prediction model based on hundreds of user and supplier attributes to identify frivolous orders and returns.
Our priority is always to help our sellers succeed (by saving their money). Given the choice between creating artificial urgency to deliver faster — which drives us supply chain costs — and ensuring maximum vehicle utilisation for each delivery, we always choose the latter.
We wholeheartedly follow a user-first approach, and our users value cost efficiency over all else. Our 0% seller commission and favourable logistics rates offered by 3PL players, makes us the lowest cost channel for small businesses. Our recent achievement — India’s fastest e-commerce company to amass 1.1 million sellers — is premised on innovations like these, where we challenged longstanding beliefs and didn’t force-fit solutions created for other markets.
There you have it: Meesho’s method of saving big bucks for suppliers by adopting out-of-the-box solutions and using a tech-first approach.
Cover Image: Rahul Prakash