Meesho bets on logistics fixes, operating leverage to lift margins after Q3 loss widens

Bengaluru: E-commerce marketplace Meesho Ltd’s net loss widened to ₹490 crore in the December quarter from ₹37 crore in the same quarter last year, as increased spending on logistics and technology pushed up costs.

The firm’s revenue from operations grew 31% to ₹3,517 crore, while expenditure surged to ₹ ₹4,071 crore from ₹2,822 crore in the year-ago period.

The Bengaluru-based company expanded its logistics network under Valmo, resulting in temporary inefficiencies such as under-utilized routes, redundant nodes, and longer delivery distances. A one-time restructuring cost on this count in the quarter dented contribution margin by 2.3%, Meesho said in a shareholder letter on Friday.

Contribution margin is a metric that nets variable costs from revenues and shows a company’s ability to generate cash.

“Contribution margin was at 2.3% due to accelerated Valmo scale-up following 3PL [third-party logistics] industry consolidation. This is expected to normalize in the coming quarters,” Meesho said.

Lowering per-order cost

The marketplace is working on shedding redundant nodes, refining delivery routes, and increasing throughput in the newly scaled nodes in the fourth quarter and this is expected to drive down per-order cost, the company added.

Meesho’s net marketplace value (NMV), the cumulative checkout value of successfully delivered orders on the marketplace inclusive of all taxes, grew 26% YoY to ₹10,995 crore. Its transacting user base reached 251 million in the latest quarter, against 187 million in the same quarter previous year.

Meesho, which released its first-ever quarterly numbers on Friday since its public listing, operates an e-commerce marketplace that connects small sellers with value-conscious consumers across India, primarily in tier II and smaller cities.

The company now intends to accelerate investments in advertising and sales promotion to support new user additions as well as expand its non-technology talent in FY26 in Valmo, content commerce, and its branded products vertical Meesho Mall.

“We expect significant improvement in adjusted Ebitda margin in the next two quarters returning to Q1 FY26 levels; driven by logistics cost recovery and operating leverage on user growth and technology investments made in FY26,” the platform noted in its statement.

With one of its key logistics partners going out of business in May-June last year, Meesho had to work quickly to ramp up its logistics capacity ahead of the festive season, a period crucial for e-commerce companies.

“We had to scale up capacity with Valmo very fast which came at a cost. This should go away in the next two quarters,” Vidit Aatrey, managing director and CEO of Meesho, said during the analysts call on Friday.

The firm is also working on expanding its categories, especially those available in Meesho Mall (Meesho’s marketplace for a mix of branded and unbranded products), to provide a wider variety of grocery, personal care, baby care, and home and kitchen products, Aatrey noted.

“We continue to make the platform conducive to products across price points. Some of our branded products in personal care and baby care, for example, have grown well on the back of Meesho Mall. There is a lot of expansion opportunity available there in all these categories, and we continue to add more sellers, brands, and use cases,” Aatrey said.