India is one of the fastest growing economies, but its supply chain system remains outdated, operating much as it did several decades ago. The logistics sector is highly fragmented, with a majority of small regional operators lacking scale and efficiency. Regional truckers still rely on brokers and word of mouth to secure their goods, while severe truck shortages in urban industrial centers delay the movement of goods.
And that's a problem for India's growing e-commerce sector – and for the players involved. Meesho – backed by Prosus Ventures, Fidelity, SoftBank and Peak XV – is trying to fill gaps in the country's supply chain.
The Bengaluru-based startup on Wednesday launched a network, called Valmo (short for value movement), which aims to bring together logistics platforms, technology partners and small entrepreneurs operating sorting centers to optimize the delivery process.
Meesho is betting on micro-entrepreneurs because they have a strong understanding of local communities and have the latent capacity to take on additional work, the startup said. The network allows delivery partners to be located closer to users, reducing the time required for each delivery. It also provides complete visibility into a package’s journey, ensuring a comparable experience for customers.
“Valmo aims to organize smaller players to play a role in the larger e-commerce system,” Sourabh Pandey, CXO of Fulfilment & Experience at Meesho, said in an interview. Small players only account for around 20% of e-commerce deliveries today. “With Valmo as a network, we believe we can increase this share to 45%,” he said.
Meesho also challenges the traditional logistics model, in which operators obtain large boxes and fill them with volume to reduce the overall cost.
“We strongly believe to the contrary,” Pandey said. “We believe in creating a more plug-and-play network that can add capacity on demand and we believe this will be a lower cost operating model. Even if there is a large volume of trips from one city to multiple destinations, we route them through multiple disaggregated nodes.
Valmo is a win-win solution for all participants in the ecosystem. Micro-entrepreneurs manage to find more work, while the network generates more demand for delivery actors. Since Meesho attempts to leverage bandwidth that is currently not used at scale, it is able to reduce delivery costs, which benefits both the buyer and the seller.
Pandey said the startup began piloting the project last year and Valmo is now already operational in 20 Indian states, enabling more than 800,000 orders per day. Valmo is currently only used by sellers to fulfill Meesho orders, he said.
Meesho does not see Valmo as a way to shed its dependence on its current logistics players – Delhivery, Shadowfax, Xpressbees, Ecom Express – and hopes that many, if not all, of them will participate in the new network, Pandey said.