Meesho has emerged as the first horizontal e-commerce firm to reach positive cash flow, and that is a significant change in a market where profitability has long remained elusive even as new competitive threats emerge.

The SoftBank and Prosus-backed Indian e-commerce firm, which concentrates on customers in smaller cities and towns, reported 97% drop in the losses, while operating revenue grows 33% as well to ₹7,615 crores for the March-end fiscal 2024 with operating cash flow of ₹232 crores.

Meesho continues to grow faster than e-commerce's surge in India. The growth of the Indian e-commerce industry is going to moderate to 17% in 2024 and then accelerate to 20% in 2025, according to Bank of America analysts this week. The relative slow growth is due to the impact of consumption slowdown and a slower growth in the apparel industry.

Flipkart's marketplace business, its largest, said in filings this week that it more than doubled its revenue in the financial year ended March to $2.12 billion, growing 21%, with losses falling 41% to $280.4 million.

Quick commerce companies are remoulding the Indian commerce market while urban cities are transforming themselves simultaneously. Blinkit is Zomato's arm for quick commerce. From 4-5,000 SKUs earlier, they have increased SKUs to above 10,000 in a network of dark stores-it is a warehouse from where inventory is stocked. Other notable features include payment instalments above ₹3,000, 10-minute return services on clothing and footwear items, split shipment orders, among others.

Players of speedy commerce, comprising BlinkIt, Zepto, with backing from Nexus, Instamart from the Prosus-supported Swiggy, as well as BigBasket-owned by Tata, are poised to top about $6 billion of annual sales according to this analysis from TechCrunch.

For the established players, the battle increasingly looks like a fight for dominating the full stack. Both Amazon and Flipkart now make about 90% of their deliveries in-house while Meesho has even launched its own logistics service Valmo to optimize shipping cost. Valmo is handling almost 35% of all Meesho orders, says Bank of America.

With stiffer competition to be the third Internet shopper after 100 million for India, Meesho claims that 45% of its customers are actually from tier 4 and above, and 145 million are annual unique transacting users or nearly 10% of the country's population.

"We are also seeing a huge number of new-to-e-commerce users, which reflects the strong customer acquisition we are able to achieve from India's underserved markets," said Meesho in a statement. "This doesn't only indicate the vast scale for e-commerce in India but also highlights our important contribution toward making e-commerce available to the previously ignored areas.".

Bank of America expects nearly 120 million new online shoppers to enter the e-commerce market over the 2024-27 period and sees the base reach close to 380 million. It believes about 75 percent of these new users would likely come from Tier-2/3 cities, being a different kind of first-time online shopper.