As Meesho IPO opens, in-house logistics play Valmo emerges as its biggest competitive edge

Reliability often depended on which partner happened to handle a particular shipment, while pickups shifted without notice, return cycles were inconsistent and tracking frequently disappeared between handovers.

To cope, Yadav built buffers into every part of the business—extra stock, flexible delivery commitments and handwritten logs to track parcels whenever shipments stalled. “It wasn’t that the services were bad. It was just unpredictable, because no network covered every part of the city," she says.

Around late 2022, she noticed things beginning to stabilize. Pickups became more consistent, turnaround times shortened and fewer parcels got stuck mid-route. What she didn’t know then was that Meesho had begun routing her shipments through local delivery partners plugged into Valmo, its in-house logistics layer.

“It just became more predictable. I knew when parcels would move and there were fewer surprises in between," she adds.

A very different picture emerges in larger metros. Arjun Kumar, who sells handmade mobile accessories out of his home in Bengaluru, says his logistics challenges were never about availability but about clarity. “Here, there are plenty of delivery options and competition keeps service levels tight," he says. For him, Valmo made returns settlement and tracking more precise rather than transforming delivery basics.

“Metro deliveries were already quick. What changed was better visibility and fewer disputes," he notes.

Yadav’s and Kumar’s experiences reflect the two very different logistics realities that Meesho and its in-house logistics service Valmo operate within.

Unlike logistics services run by other e-commerce companies such as Flipkart (Ekart) and Amazon (Amazon Transportation), as well as by third-party logistics providers such as Delhivery, Meesho does not own a fleet of trucks or warehouses. It has thus avoided incurring the heavy capital expenditure involved but had less control over delivery. Valmo was conceived to address that gap.

After a pilot run, Valmo was launched officially in 2024 as Meesho’s in-house logistics aggregator. It partners with delivery companies and offers their services to its sellers. At the time of launch, it had tied up with over 3,000 small courier services across small towns.

Valmo fulfilled upward of 763 million orders in 2024-25, reshaping how Meesho manages delivery cost and reliability across regions where demand is rising but infrastructure remains uneven.

As Meesho moves toward a public listing, Valmo has become central to evaluating its long-term economics and competitive defensibility, market watchers say. Much of the company’s ability to sustain its success now hinges on whether the logistics arm can continue making rapid inroads into India’s most remote pin codes—areas traditionally difficult and expensive to serve because of low delivery density, longer travel distances, weak transportation networks and unpredictable service conditions.

Meesho declined to respond to emailed queries sent by Mint.

The company’s ₹5,421 crore initial public offering (IPO) opened for subscription on Wednesday, 3 December, and will close on Friday. The IPO, with a price band of ₹105-111, values it at ₹50,096 crore at the upper end.

The offer consists of a fresh issue worth ₹4,250 crore and an offer for sale (OFS) component of ₹1,171 crore at the upper end of the price band. The OFS will see early investors, including Elevation, Peak XV, Venture Highway and Y Combinator, sell part of their stakes.

Why Meesho built Valmo

For much of its early growth, Meesho leaned heavily on third-party logistics (3PL) providers. The approach enabled quick scale and required limited capital expenditure. But as order volumes increased, inefficiencies in pickup consistency, routing and return cycles became more visible, especially in fragmented tier-2 and tier-3 delivery environments.

“At high volume, small inefficiencies become expensive. When you’re handling millions of orders a month, even a minor delay in first-mile pickup or a mismatch in routing logic can ripple across the system," said an e-commerce industry executive, asking not to be named. Companies, the executive added, need a level of control and visibility that’s hard to achieve when every leg of the journey is managed by a different partner.

Early discussions around Valmo focused on gaining operational control and reducing dependency risk rather than eliminating partner involvement, says a former Meesho employee, on condition of anonymity. Rather than expanding aggressively nationwide, Valmo built coverage in smaller chunks, resolving issues locally before scaling clusters. That required recalibrating partner contracts, training and resolving technology mismatches.

Valmo today acts as an orchestration layer that connects multiple logistics providers—delivery service partners, sorting hubs, truck operators and independent riders—within a coordinated platform. Instead of relying on a single provider from pickup to delivery, different partners handle different stages of the journey. The average order in 2024-25 passed through around four handovers, according to Meesho’s prospectus, filed on 26 November.

Rather than fixed shipping corridors, Valmo’s routing software evaluates multiple possible paths in real time, weighing capacity, reliability, cost and delivery promises. If a network node experiences disruption—weather, staffing issues or overload—the system automatically reroutes parcels. Automated exception management and partner performance tracking attempt to reduce delivery failures.

Within roughly a year, Valmo scaled from handling about 20% of Meesho’s orders to around 62% in the quarter ended June, and this shift is directly linked to Meesho’s per-order fulfilment cost falling from ₹50.45 in 2022-23 to about ₹37.70 in the quarter ended June, as per its prospectus.

The secret sauce

So, how did Valmo help reduce fulfilment expenses?

According to the e-commerce industry executive quoted above, Valmo’s biggest advantage is that it is designed for the economics of mass e-commerce. Instead of a few large players, Valmo enables dozens of regional operators to compete at every stage. More competition leads to better pricing.

Moreover, Meesho’s packages travel shorter distances between handovers, often on bikes, making logistics more of a local or intercity activity. The company’s large volume of orders in tier 3+ regions, along with little-to-no fixed costs like inventory and warehouses, and growing partnerships with small-scale middlemen for movement of goods, is helping Valmo offer cheaper logistics costs to sellers.

“It’s actually a very complex process with many moving parts but Meesho’s reach in tier 3+ towns is helping build deeper relationships with small entrepreneurs that’s proving beneficial for Valmo," says Satish Meena, an analyst at market research firm Datum Intelligence.

The tech play

Ram Soni, partner (mobility energy and transportation) at consulting firm Praxis Global Alliance, says how Valmo uses data on reliability, cost, capacity and pin code risk to route orders efficiently, manage peak demand and keep delivery partners motivated through fair allocation and payouts will ultimately decide how smoothly and cost effectively it can scale.

To keep up, Meesho is looking to accelerate technology investments, including in its proprietary artificial intelligence/machine learning (AI/ML) models, GeoIndia LLM and BharatML Stack, and use them to solve operational hurdles. According to the prospectus, Meesho will invest as much as ₹1,390 crore from the IPO net proceeds this fiscal year towards cloud infrastructure needs as well as an additional ₹480 crore towards hiring talent for its AI and ML teams.

“We have continued to evolve, invest, and we will continue doing it even after going public," Vidit Aatrey, Meesho’s co-founder and chief executive officer (CEO), told Mint in an interview last week. “Actually, nothing changes for us. Being public or private doesn’t change that. If you are not investing a lot in technology, you’ll stay behind."

Additionally, Meesho does not plan to use Valmo to service other companies. “I think it will continue to be captive. It’s a core part of our value proposition, and we will keep it within the ecosystem," Aatrey had said. “All the benefits accrue to the ecosystem. So, we have no plans to externalize it ever."

The hurdles

Despite initial success, several operational hurdles prevail that could make or break its next phase.

“Scaling from 100 million to 300 million deliveries is one challenge. Scaling from 300 million to 600 million in sparse regions is a completely different one," said the e-commerce executive quoted above.

More than 88% of Meesho’s orders come from beyond the top eight cities, powered by shoppers making frequent, small-ticket purchases, pushing its average order value down from ₹336 in 2022-23 to ₹274 in 2024-25, even as order frequency rose sharply.

Some analysts say asset-light orchestration models may face limits if growth outpaces density, particularly in regions without strong local partner ecosystems. Predictability becomes significantly harder to maintain once volumes expand into geographies with low density and longer route lengths, where per-parcel costs rise sharply and visibility weakens, according to Soni.

“Logistics players like Valmo will struggle with three basic issues in smaller towns: weaker infrastructure and patchy delivery networks, unclear or non-standard addresses, and a high share of cash on delivery (COD) orders that get returned, which makes small-ticket deliveries expensive," says Soni.

To make these markets work, the company needs to live with slightly slower but reliable three-five day delivery instead of costly express while keeping tight control on service agreements and performance. COD is necessary to build trust but the e-commerce firm also has to steadily nudge customers toward prepaid so returns and cash leakages don’t destroy unit economics, Soni adds.

Meanwhile, competition for delivery partners has intensified across platforms, pushing up acquisition and retention costs, especially during peak sale periods, when labour supply tightens. In the August-November festival season this year, demand for gig workers had surged 30-50% compared to the festival months last year, Mint had reported earlier. Wages had spiked; many workers doing delivery or porter services made ₹45,000 to ₹50,000 a month.

The 3PL hit

Valmo’s growth, meanwhile, has hit 3PL companies. In 2023-24, for instance, Ecom Express, which was bought by Delhivery in April in a slump sale, received more than half of its business from Meesho.

The e-commerce firm routed nearly half of its 1,587 million orders through Valmo in the financial year ended March 2025, up from 20% in 2023-24 and 1% in 2022-23, according to its IPO papers.

“When a large marketplace shifts deliveries internally, everyone recalibrates. You plan routes, hiring, and asset allocation differently," said an early-stage venture capital investor that has invested in e-commerce businesses. He didn’t want to be identified.

“Marketplaces and sellers moving to in-house logistics, as in the case of Meesho, is among the biggest risk factors for third-party logistics players," says Meena of Datum Intelligence. “Not only is this pushing 3PL players to keep client concentration in check, it also prompts them to explore other money-making avenues, like hyperlocal and express deliveries. We are already seeing that happen with the likes of Delhivery, Shadowfax and Blue Dart," he adds.

Competition is intensifying because e-commerce logistics itself is a fast-growing pool, with the market in India expected to reach around $7 billion in 2025 and grow at 9-10% compound annual growth rate until 2030, with intense rivalry among Delhivery, Ekart, XpressBees and others.

The road ahead

So, what should retail investors watch out for, going ahead?

“Investors these days care less about how many parcels a company ships and more about whether the business can actually make money from those deliveries," Soni says. “Metrics like a healthy Ebitda and cash flows will prove operating leverage and sustainability."

Ebitda is short for earnings before interest, taxes, depreciation and amortization.

Last fiscal, Meesho made a loss of ₹3,941.71 crore, compared to ₹327.64 crore in 2023-24. The six months ended September 2025 saw it report a loss of ₹700.72 crore.

However, many market watchers are also impressed that Meesho has become the first new-age e-commerce company to go public, which suggests they may be willing to give the company time to work through tougher challenges such as cracking last-mile delivery, according to Meena.

As Meesho comes under public market scrutiny, Valmo’s ability to support its expansion deep into the hinterland will determine how its next phase of growth plays out.