Meesho’s Valmo Move Sends Ripples Through India’s 3PL Ecosystem

Social commerce platform Meesho is taking a leaf out of the insourcing playbook with its in-house logistics arm, Valmo. Valmo, launched last year, already handles 20 to 35% of Meesho’s sales volumes, BofA wrote in a recent note. With the potential to handle up to half of Meesho’s shipments, the move has put third-party logistics (3PL) providers on notice.

Bringing logistics in-house comes at a cost – captive arms of major e-commerce players are typically 10-15% pricier than 3PL services. Meesho, per BofA, appears willing to pay the premium for greater control over the user experience.

3PLs are banking on the growth of D2C brands to offset the potential impact of Valmo. Industry shipment volumes are expected to grow 15-20% in FY25, reaching 5.2-5.4 billion, providing some cushioning for the sector.

Delhivery, with its strong account management, comprehensive tech stack, and D2C integration capabilities, seems well-positioned to navigate the changing landscape. However, smaller players may feel the squeeze if Valmo gains traction.

Back to Valmo, BofA adds:

Per the experts, Meesho would likely use Valmo in pockets where they have higher number of sellers or have high demand clusters. For other areas, 3PL would ideally work better for Meesho orders; 2) Even for the horizontal e-com players, 3PL tends to work better in categories like large appliances or furniture etc due to their expertise. For a smaller item/category like fashion, 1P/in-house logistics could be used. The experts also believe that as participants like Nykaa scale up, they might do some orders in-house mainly in high order density areas; 3) While brands & platforms could do forward logistics by themselves, 3PL partners are better leveraged to do reverse logistics pickups.

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