Summary of "Ep #3| WTF is E-commerce: Kishore Biyani, Udaan & Meesho Founders Reveal What Sells and What Doesn’t"

Summary of Ep #3 | WTF is E-commerce: Kishore Biyani, Udaan & Meesho Founders Reveal What Sells and What Doesn’t

Key Themes & Business Insights

1. Company Backgrounds & Origins

Meesho (Vidit Aatrey): Founded in 2015 to bring India’s vast offline small businesses (~85% of retail) online. Started without deep knowledge but focused on enabling millions of small sellers and reaching 140 million consumers annually across categories.
- Metrics: ~140 million consumers, ~1 million small businesses, ~1 billion orders/year, Gross Merchandise Value (GMV) approx. $5B, average order value ~₹320.
Kishore Biyani (Future Group): Pioneer in organized retail in India, created formats like Big Bazaar, Central, Brand Factory, and diversified into NBFC, logistics, insurance. Compounded growth at ~30% annually over 30 years. Emphasized understanding Indian consumers deeply, learning from local ecosystems (e.g., crowd management at Tirupati temple).
Sujit (Udaan): Came from a Hindi-medium small town, worked at Flipkart from early days focusing on supply chain and operations, then co-founded Udaan, a B2B e-commerce platform.

2. E-commerce Market & Consumer Segmentation in India

India’s retail market is highly heterogeneous with three broad consumer segments:

India 1 (Consuming class): ~20 crore people, discretionary income, drives most consumption.
India 2 (Serving class): Helpers, lower discretionary income but rising.
India 3: Farm laborers, lowest consumption.

E-commerce primarily targets India 1 and increasingly India 2, with aspirational consumption growing strongly in India 2. Consumers in India 2 have smaller wallets but strong aspirations, often fulfilled via platforms like Meesho that enable affordable access to aspirational products.

3. Product & Market Strategy

Products sell by fulfilling customer needs and wants, including daily and occasional consumption, and also vanity/aspirational desires.
Social media (Instagram, TikTok, reels) is a key driver of product discovery and trendsetting, with decentralized influencers shaping buying behavior more than traditional celebrities.
Localization is critical in marketing: Meesho’s IPL campaigns used different regional celebrities to appeal locally rather than a single pan-India celebrity.
Brands need to align with influencers whose values match the brand’s philosophy (e.g., sustainability, body positivity) rather than just paying for reach.
Digital and physical commerce are converging; consumers expect seamless omnichannel experiences.

4. Operations & Technology

Supply chain, sourcing, inventory management, and technology infrastructure (SKU cataloging, search, pricing) are key operational levers in e-commerce.
Unit economics (profitability per order) and Average Basket Size (ABS) vary by platform and category (Meesho’s ABS ~₹320 vs Flipkart’s ~₹1200).
The future of commerce involves leveraging AI, generative AI, and new tech to predict demand and customize offerings.
ONDC (Open Network for Digital Commerce) is an interoperable e-commerce platform aiming to unify sellers across platforms, similar to UPI for payments. This could disrupt marketplace differentiation but is still early-stage.

5. Growth, Profitability & Funding

E-commerce companies face a trade-off between growth and profitability.
Early-stage focus is on reaching critical mass with growth; profitability comes later once scale is achieved.
Unit economics must be positive; burning money without unit economics discipline is risky.
Marketing spends are significant but ROI is hard to measure precisely. Localization and influencer marketing have proven effective.
The future may see less funding availability, requiring tighter capital discipline and focus on sustainable growth.

6. Examples & Case Studies

Big Bazaar: Inspired by traditional Indian bazaars, opened 3 stores in 22 days to build scale quickly.
Food & QSR: Emerging sectors like quick service restaurants and coffee chains are growing fast, with some stores achieving ₹4.5-5 crore/month revenues and ~70% gross margins.
Bliss Club: Women-focused fitness brand built primarily on Instagram and influencer marketing, emphasizing body positivity.
Multiplex & Entertainment: Mixed outlook on multiplexes post-pandemic; competition from OTT platforms rising but physical experience still valued.
Naika: A listed beauty and fashion e-commerce brand focusing on curated third-party products with ~5% net margin, seen as a niche vertical player rather than full Indian e-commerce market representative.

7. Leadership & Entrepreneurship Insights

Founders shared personal stories about growing up in constrained environments fostering grit and entrepreneurial spirit.
Importance of introspection and recognizing personal “fatal flaws” for entrepreneurs to improve decision-making and leadership.
Building organizations that encourage dissent and honest feedback helps uncover blind spots.
Luck plays a significant role in entrepreneurial success, but disciplined execution is critical.

Frameworks & Playbooks Highlighted

Consumer Segmentation Framework: India 1, India 2, India 3 for targeting and product-market fit.
Marketing Playbook: Localization + influencer alignment + digital-first brand building.
Growth vs Profitability Framework: Achieve scale first, then focus on profitability with positive unit economics.
Technology Levers: Use AI and data analytics for demand prediction, SKU rationalization, and personalized merchandising.
ONDC Vision: Interoperability in e-commerce akin to UPI in payments for democratizing seller access.

Key Metrics & KPIs

Meesho:
- 140 million annual consumers
- 1 million small businesses
- 1 billion orders/year (~₹5 billion GMV)
- Average order value ~₹320
- Target profitability by end of current year
Naika:
- ~₹4000 crore revenue
- ~5% net margin
Growth rates: Future Group compounding at ~30% for 30 years (historical retail).
QSR stores example: ₹4.5-5 crore/month revenue, ~70% gross margin, ~30% net margin.

Actionable Recommendations

For entrepreneurs:

Focus on understanding evolving consumer needs and aspirations.
Leverage social media and influencer ecosystems authentically aligned with brand values.
Prioritize unit economics and build scalable supply chains.
Embrace localization in marketing and product offerings.
Prepare for a hybrid commerce future (digital + physical).

For investors:

Look beyond platforms to include D2C brands and niche verticals enabled by e-commerce.
Evaluate companies on unit economics, category depth, and ability to scale profitably.
Be cautious of overvaluation and the sustainability of growth funded by cheap capital.

Presenters / Sources

Kishore Biyani: Founder of Future Group, retail pioneer in India.
Vidit Aatrey: Co-founder & CEO of Meesho.
Sujit Kumar: Co-founder of Udaan, former Flipkart operations leader.
Host / Moderator: Nikel (name mentioned at end).

This episode offers deep insights into the Indian e-commerce ecosystem from founders who have built and scaled major platforms and brands, emphasizing consumer understanding, operational excellence, and evolving marketing strategies in a highly fragmented market.