E-commerce unicorn Meesho, preparing for a public listing in the coming months, has significantly improved its margins over the past two years, driven in large part by the rapid expansion of its in-house logistics arm, Valmo. Since its launch in August 2022, Valmo’s share of Meesho orders has soared from less than 2% in FY23 to 62% in the three months ended June 2025, according to the company’s updated IPO prospectus.
Meesho’s challenge has been to profitably deliver low-value items, such as Rs 200 kurtas or Rs 99 home décor products, across 19,000 pin codes. To address this, the company designed Valmo not as a standalone delivery service but as an orchestration layer connecting thousands of third-party logistics partners across first-mile, mid-mile, and last-mile operations. Using dynamic routing technology, Valmo assigns each order to the most cost-efficient carrier based on location, capacity, and performance data, enabling smaller logistics operators to collaborate in fulfilling orders.
This model benefits both sellers and logistics partners. Sellers enjoy lower fulfilment costs due to competition among logistics partners, while logistics providers gain from higher order volumes. Meesho’s per-order costs, including logistics and fulfilment, fell from Rs 50.45 in FY23 to Rs 37.70 in the three months ended June 2025.
The reduction in fulfilment costs has been a key driver of Meesho’s improved cash flow. The company reported Rs 200 crore in free cash flow in FY24, up from negative levels two years ago, and Rs 591 crore in FY25. Adjusted operating loss narrowed sharply from Rs 1,694 crore in FY23 to Rs 219 crore in FY25.
Unit economics have also strengthened. Contribution margin from Meesho’s marketplace business rose from 2.9% of net merchandise value in FY23 to 4.9% in FY25, translating to Rs 1,484 crore in contribution margin in FY25, compared with Rs 566 crore in FY23. The company said that lower fulfilment costs allow sellers to price products more competitively, attract more consumers, and expand the range of low-value items on the platform.
However, the company warned that relying on a fragmented logistics network carries risks. Any failure to onboard or retain sufficient logistics partners during peak periods or in key regions could lead to capacity shortfalls, delays, or unfulfilled orders.
Despite the risks, Valmo’s asset-light aggregation model has scaled rapidly. As of Q1 FY26, the ecosystem included 13,678 active logistics providers and more than 85,000 delivery agents. Valmo processed 763.5 million orders in FY24, up from 224 million in FY23, and handled over 295 million shipments in the first quarter of FY26.
Meesho’s innovative logistics strategy underscores its focus on value retail and positions the company for a strong debut in the public markets.
