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Problem Teardown

Problem Statement

Pick Meesho and one global e-commerce app. Evaluate the two homepages. Tell us the 3 most impactful changes we can make on the Meesho homepage and why.

💭 Thought —— ‘Most impactful change’ is a vague term until an achievable is attached to it.

‘Most impactful change that drives revenue’ or ‘Most impactful change that drives retention’

makes more sense.

📌Assumption - Assuming that, according to the video by Balaji, all teams within the Growth department use Net Merchandise Value (NMV) as their North Star Metric in Meesho, this problem statement is aligned with the Growth charter. Therefore, for the purpose of this assignment, we will also adopt NMV as our North Star Metric.

North Star Metrics

Let’s understand, Incremental Net Merchandise Value (NMV)

The formula for calculating Incremental NMV is:

Incremental NMV = (Revenue from additional sales) - (Costs associated with additional sales)

Incremental Net Merchandise Value (NMV) refers to the additional revenue generated from the sale of goods or services on a platform after accounting for all associated costs and expenses directly related to those sales. It measures the net increase in the value of merchandise sold through the platform compared to a baseline or previous period.

Why is Incremental NMV important for Meesho?

Because Incremental NMV helps in evaluating the impact of initiatives aimed at bringing users back to the platform, improving engagement, and encouraging users to place orders. By tracking the incremental value generated from these efforts, Meesho can assess their effectiveness in driving growth and profitability.

Expanding on the Problem statement

With the expected changes, we are essentially trying to solve for -

Bringing users back to the platform (Retention)

Getting them to engage (Engagement) getting them to place orders (Conversion)

Now, the reason,

Why I’m solving for re-engagement and retention.

⁠

Cost Effective: Product teams usually focus upon acquiring new customer and significant manpower goes into making the onboarding funnel smoother for the product, but

studies have shown⁠

that it is much more cost effective to retain customers than to acquire new ones.

Affordability: It’s

5–25X more expensive⁠

to acquire a new customer than it is to retain an existing customer.

Loyalty: Retained customers

buy more often and spend more than newer customers⁠

. They’ve learned the value of a product or service and keep coming back, again and again.

ROI: A

5% increase in customer retention⁠

can increase company revenue by 25–95%.

Referrals: Satisfied, loyal customers are more likely to sing a company’s praises and

refer their friends and family⁠

— bringing in new customers, free of charge.

Therefore,

Defining Goal

Enhance user experience to keep users coming back, engaged, and placing orders on Meesho.

Business Model

Providing varied varieties of products like Amazon and Flipkart, Meesho has given a wide range to choose from, to its customers. Business model is clearly to become a competitor with e-commerce. The delivery time, customer base, and ease of reach make it a good alternative for e-commerce sites.

There are 4 parties involved in the mechanism of selling/reselling at the Meesho app; namely-

The supplier/seller; or the first party.

The reseller/App users (anyone with the Meesho app can become a Meesho reseller).

Meesho platform

End-User or the final consumer of the product. They have no direct interaction with the Meesho platform.

Primarily operating as a social eCommerce platform, Meesho is following a Direct-to-Customer (D2C) model. If we focus on the reselling opportunities that come along with Meesho, we can say that it also holds a hybrid model, including B2C and B2B.

D2C: As customers are getting the best quality products at competitive prices direct from manufacturers, wholesalers, and retailers, there’s no middle man to earn a commission. This model is known as the Direct-to-Customer business model.

B2B: Because the cost of products is lower than other websites, we can find some customers buying goods to sell further as a business person. So, Meesho follows the Business-to-Business model also.

B2C: As the companies or sellers are selling products directly to customers, we can witness Meesho following the Business-to-Customers business model.

How Meesho Works?

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Earning structure for Meesho sellers and Resellers

The division of money is carried out by Meesho. The money left after paying the originally quoted price to the original seller and keeping a minimal amount of delivery charge the rest is transferred to the Meesho App user's account.

The reseller or the person who has placed the order shall receive a commission on every order placed. Reselling with Meesho is similar to earning by drop shipping or affiliate marketing as the resellers earn without actually physically holding any kind of inventory.

It is basically a Win-Win situation for all sellers, resellers, and the ultimate customers.

Revenue Model of Meesho

Meesho earns by charging from its users for every order they receive. The revenue model is kept to focus on volumes of sales and not on the margins of profits.

In case of delivering an order - Meesho earns by taking a 10-20% commission based on the nature of the product along with the delivery charges for the product.

In case of product return - Meesho charges a hefty penalty for the product returns. Customer satisfaction is the given topmost priority and sales returns are dealt with very strictly.