Meesho Invests in AI and Data Science to Enhance Customer Experience, But What About Meesho’s Dismal Customer Service Reputation?

Meesho enjoyed tremendous growth, especially during the funding boom in 2021, with its reseller model gaining immense popularity in India’s smaller cities and among low-income households.

However, in 2022, Meesho, backed by SoftBank and Meta, underwent a strategic shift in its positioning, transitioning to sell directly to end consumers. This move required significant investments in customer acquisition as it entered direct competition with industry giants like Flipkart and Amazon.

Meesho Highlights 

Meesho’s last funding round took place in September 2021, during which it secured $570 million at a valuation of $4.9 billion. Despite making multiple attempts to raise additional funds, including discussions with Google, the company has struggled to attract interest from potential investors.

In the fiscal year 2022, Meesho experienced a surge in losses, increasing 7.5 times to Rs 3,247 crore. However, during the same period, its revenue grew, jumping 4.5-fold to Rs 3,232 crore from Rs 792 crore in the previous fiscal year. These escalating losses can be attributed to Meesho’s ambitious endeavours to compete with major players such as Flipkart and Amazon India.

In the interim, Meesho has encountered many controversies; however, while Meesho has been trying to whitewash its image by taking bigger leaps, there’s much that is desired when it comes to customer experience and customer satisfaction ratings.

Meesho’s Very Unhappy Customers
Here are a few examples of the same –

Example 1 – Fraudsters, liars, cheaters work here -all employees, from sellers to logistics to customer care. I ordered a kurti, and instead of the kurti, I received an old, dirty, stained men’s trousers; I placed for return, but the courier guy rejected it. I tried getting help through Meesho customer service, but they denied help, saying the company had confirmed sending the right order; I lost my money and was left with a useless product.

Along with this, I had another product, which was received right, but since I didn’t like the product, I placed it for return. A guy came to collect it, picked it up and went, but didn’t update the pickup, due to which I lost my money again—total corruption in all departments.
The company don’t give a $#*! about customers. One of the agents said they can’t do anything for me because I have been listed under the bad customer category, as I have too many returns in the past; if those useless people had done their job right, why would I return?
I had contacted all higher authorities possible, but still no reply from anyone to date.

Example 2 – Money Refund
Why are you not giving my margin money, and account details are changing automatically… Don’t do this kind of fraud to anyone, please.
Tip for consumers:
Fraud

Example 3 – Meesho should stop their business as they r least bothered about customers. Suppliers of Meesho are all low-quality suppliers and cheaters. They deliver wrong, defective, and poor-quality products. I received wrong and defective products, and when I complained, Meesho took their hands back and said we couldn’t help. I m attaching a pic as a proof. I received the wrong product from suppliers, and when I called Meesho…they said our suppliers sent the correct product only, so we can’t exchange it. Plz plz…do not buy anything from Meesho.

There are countless such tragic cases regarding poor customer support, grievance handling and the fact that customer support in almost all cases put up their hands with excuses such as –

1) We cannot help you
2) We supplied the right product
3) No exchange can be done
4) No returns can be managed
5) No refunds initiated

Hence comes the question, will Meesho ‘s Investment in AI and Data Science to enhance customer experience and Generative AI being explored by Meesho to enhance efficiency across various teams, particularly in marketing and content, with the goal to leverage AI-powered shopping assistants to help customers find the best-fit products, even with vague search queries and capable of generating coherent conversations and inferring meaning from search queries – be of any help when the main and critical question of customer satisfaction and grievances remain unaddressed?

Meesho’s High Claims
The company has reported its total expenses rose five-fold to Rs 6,607 crore from Rs 1,337 crore as advertising, salaries and other expenses grew during the financial year. Employee benefit expenses grew 3.4 times to Rs 509 crore in FY22 from Rs 149 crore in FY21.

Meesho’s logistics and fulfilment costs grew 4.4 times to Rs 2,829 crore in FY22 from Rs 632 crore in FY21. Advertising expenses grew more than six times to Rs 2,579 crore from Rs 424 crore as the company aggressively promoted its app on television during the Indian Premier League.
The startup has since been trying to reduce its burn. On June 2, it was reported that Meesho expects to cut costs and extend its cash runway as it struggles to raise funds in a tough macroeconomic environment.

This is where it takes the cake, though – it introduced new policies – such as ‘a no returns for goods sold at a reduced price’ and ‘pickup from the nearest delivery centre’ – to reduce last-mile and return costs.

What set Meesho apart from its giant competitors and helped it pull the rug from under its feet was its zero-commission strategy. Small sellers flocked to Meesho’s marketplace thanks to venture capital (VC) money that powered the e-commerce startup’s technology and marketing. The zero commissions also meant sellers priced items much lower on the platform compared to other marketplaces.

Having won sellers, buyers, and volumes by matching unbranded items at the low end of the e-commerce pyramid with its target customers, Meesho has been tweaking its strategy. It has set foot in the territory of its larger rivals, Flipkart and Amazon, by selling branded items to its 100-million user base, a large part of which is spread across India’s aspirational small towns.

Meesho claims that the overall returns on its platform are around 25%, of which customer returns, or the reverse pickup as it’s called in the industry parlance, is at 8%-9%, while ‘return to origin’ or failed attempts to deliver a product make up the rest – but these numbers are highly debatable!

Sellers Unhappy Too
Several sellers on Meesho suggest that given the high returns, they often have to spend on forward and reverse shipping for many orders and hence, are not profitable on the platform.

Meesho‘s revision of its product return policy earlier this year also caused some consternation among sellers as it added more product checks. Some sellers say that the process of reclaiming compensation in case of customers returning damaged products has become tougher.

Meanwhile, according to some sellers, the cost of doing business on the platform has gone up considerably. “Meesho has consistently been increasing their rates. For instance, the return rates per order used to be INR100 till a few months ago. It was increased up to INR150, then INR160, and has now gone to INR200,” says a seller, requesting anonymity.

Dhiresh Bansal, however, denies this. “In January, we had given options to sellers to choose from different third-party logistics companies. Some of them are working for INR100-INR110 and some at INR130-INR140. We give the suppliers information about how the performance of a logistics partner has been in their PIN codes. They get the choice to give their preference. Then, we try to fulfil as much of their choice as we can,” he says.

High On Marketing And Advertising

• Like any other startup in India, Meesho’s marketplace pivot, however, has not been without risks; in just a year, it burnt nearly USD 430 million.

• Its net margin worsened though revenue rose as the company spent INR2 for every INR1 it earned in FY22, and this level of cash burn is no longer an option as the funding climate change.

• Meesho has also been running digital campaigns with top celebrities recently.

• Meesho saw significant ad spending last year, especially as it moved from a reseller model to the marketplace model and had to spend on customer acquisition. But this year, the company claims to have cut ad spending by 80%.

Meesho vs. Flipkart vs. Amazon- _revenue comparison @2x (1)
Bansal says the company is set to achieve profitability in the next six months, with the burn currently around USD10 million-USD12 million per quarter. “On a cash-flow basis, Meesho saw a breakeven in four out of the first six months of the year,” he adds.

Bansal further states – “We have accounted for all the marketing spend in our calculations to hit profitability in the next six months,”
The company also claims to have brought down cash burn by 90% from the previous year to USD10 million-USD12 million a quarter.

The Last Bit, While Meesho has made significant strides to gain sufficient traction toward customer acquisition, having won sellers, buyers, and volumes by matching unbranded items at the low end of the e-commerce pyramid with its target customers, it has made no or little efforts toward one critical segment – customer support and grievance handling, which by far is the only critical way in which the company can not only make sure of repeat customers or customer base but also mitigate the very thin and exhaustible line of companies reputation and branding, what about that?