Meesho Targets Margin Improvement Through Logistics Overhaul After Q3 Loss Expansion
E-commerce platform Meesho Ltd has reported a significant widening of its net loss to ₹490 crore in the December quarter, compared to ₹37 crore in the same period last year. This financial setback comes despite a robust 31% growth in operational revenue, which reached ₹3,517 crore during the quarter.
Cost Surge and Logistics Challenges
The company's expenditure surged dramatically to ₹4,071 crore from ₹2,822 crore in the year-ago period, primarily driven by increased investments in logistics infrastructure and technology enhancements. Meesho's aggressive expansion of its logistics network under Valmo has created temporary operational inefficiencies that contributed to the margin pressure.
Vidit Aatrey, co-founder and chief executive officer of the Bengaluru-based company, acknowledged these challenges in the shareholder communication. "The accelerated scale-up of Valmo following third-party logistics industry consolidation has impacted our contribution margin," the company stated in its quarterly update.
Logistics Optimization Strategy
Meesho identified several specific issues within its logistics network that need addressing:
- Under-utilized delivery routes creating inefficiency
- Redundant nodes in the logistics network
- Longer delivery distances increasing operational costs
The company reported that a one-time restructuring cost related to these logistics challenges reduced contribution margin by 2.3% during the quarter. Contribution margin, which nets variable costs from revenues, serves as a key indicator of a company's cash generation capability.
Growth Metrics and User Expansion
Despite the financial challenges, Meesho demonstrated strong growth in key business metrics:
- Net marketplace value (NMV) grew 26% year-over-year to ₹10,995 crore
- Transacting user base expanded to 251 million from 187 million in the same quarter previous year
- The platform continues to serve value-conscious consumers across India, particularly in tier II and smaller cities
Future Investment and Recovery Plan
Looking forward, Meesho has outlined a comprehensive strategy to improve its financial performance:
Logistics Optimization: The company is actively working to eliminate redundant nodes, refine delivery routes, and increase throughput in newly scaled logistics nodes. These measures are expected to reduce per-order costs significantly in the coming quarters.
Strategic Investments: Meesho plans to accelerate spending in advertising and sales promotion to support continued user growth. Additionally, the company intends to expand its non-technology talent across key verticals including Valmo, content commerce, and Meesho Mall.
Margin Recovery Timeline: "We expect significant improvement in adjusted Ebitda margin in the next two quarters, returning to Q1 FY26 levels," the company stated. This recovery is projected to be driven by logistics cost optimization and operating leverage from user growth and technology investments made throughout FY26.
This quarterly report marks Meesho's first financial disclosure since its public listing, providing investors with initial insights into the company's operational performance and strategic direction. The Bengaluru-based marketplace, which connects small sellers with value-conscious consumers across India, faces the dual challenge of maintaining growth momentum while improving operational efficiency.
