Meesho’s IPO, priced at ₹105–111 a share, drew bids for roughly 80 times the shares on offer. The company built a marketplace for India’s most price-conscious shoppers by refusing to charge sellers commission.
Meesho listed on December 10 after one of the most heavily subscribed large IPOs of the year, with bids for roughly 80 times the shares on offer at a price band of ₹105 to ₹111. It is an unusual company to have attracted that much enthusiasm. Its customers mostly live outside India’s big cities, its typical order is a few hundred rupees, and it does not charge sellers a commission. That last detail is the whole business model.
How a free marketplace makes money
Most online marketplaces take a cut of every sale, often 10% to 20%. Meesho charges sellers nothing per order. That attracts small sellers, many of them workshops and resellers from towns such as Surat and Tiruppur, who list very cheap products, which attracts price-sensitive buyers. Meesho earns instead from advertising, with sellers paying to appear higher in search results, and from logistics, since it runs its own delivery network. The approach only works at enormous scale, which is why investors care most about its gross merchandise value and number of orders.
If you don’t charge per sale, you have to make money on everything around the sale.
The question investors are betting on
The key test for any company like this is its unit economics: does each order, on average, earn more than it costs to deliver and support? Meesho’s small order values leave little room, so the profit has to come from scale and from advertising rates rising as the platform grows. The heavy subscription shows that professional investors believe the next several hundred million Indians coming online will shop the way Meesho’s existing customers do, carefully and cheaply.
For students wondering why this matters, it is a reminder that the biggest consumer markets in India are not necessarily the richest ones. A company that serves a hundred million careful spenders well can be worth as much as one that serves a few million generous ones.
Sources: Meesho red herring prospectus; NSE subscription data.
- Meesho’s IPO was priced at ₹105–111 and subscribed roughly 80 times. It listed on December 10.
- Its users are concentrated in smaller towns and are highly price-sensitive.
- Meesho charges sellers no commission and earns from advertising and logistics instead.
- The model depends on volume. Small margins on enormous numbers of orders.
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