Meesho’s in-house logistics arm, Valmo, slashes delivery costs, driving ₹591 crore in free cash flow and stronger margins pre-IPO.
In a strategic move ahead of its highly anticipated IPO, e-commerce unicorn Meesho has significantly strengthened its profitability by rapidly scaling its in-house logistics tech platform, Valmo. The logistics arm, launched in August 2022, has been a game-changer in cutting delivery costs, improving margins, and boosting free cash flow across the value-driven e-commerce marketplace.
Valmo’s share of Meesho’s shipped orders has skyrocketed from under 2% in FY23 to 62% in the quarter ending June 2025. Built as a tech-enabled orchestration layer rather than a traditional delivery company, Valmo connects thousands of small and mid-sized third-party logistics partners across first-mile, mid-mile, and last-mile operations. This model helps Meesho profitably deliver low-value items, like ₹200 kurtas and ₹99 décor products, across 19,000 pin codes, a segment where most large e-commerce players struggle with unit economics.
Using performance and capacity data, Valmo dynamically routes orders to the most cost-efficient carrier. The platform enables logistics partners to jointly fulfil orders without requiring full end-to-end capability, thereby creating competition that lowers fulfilment costs for sellers.
This model has paid off. Order fulfilment costs dropped from ₹50.45 per order in FY23 to ₹37.70 in the quarter ending June 2025. As a result, Meesho moved from negative free cash flow two years ago to generating ₹200 crore in FY24 and a remarkable ₹591 crore in FY25. Adjusted operating loss also shrank sharply, from ₹1,694 crore in FY23 to ₹219 crore in FY25.
Unit economics have strengthened steadily. The contribution margin from Meesho’s marketplace business increased from 2.9% in FY23 to 4.9% in FY25, translating to ₹1,484 crore in FY25, up from ₹566 crore in FY23.
“With reducing fulfilment costs, we are able to reduce the average cost charged to sellers… attracting more consumers,” Meesho stated in its updated IPO prospectus.
Rapid expansion and associated risks
Valmo’s asset-light, aggregator-led logistics model has grown rapidly:
- 13,678 active logistics partners
- 85,000+ delivery agents
- 763.5 million orders processed in FY24 (up from 224 million in FY23)
- 295+ million shipments handled in Q1 FY26 alone
However, Meesho cautioned that onboarding and retaining logistics partners—especially during peak seasons—remains a risk that could affect delivery capacity and service reliability.
With Valmo now at the heart of Meesho’s efficiency and profitability strategy, the company appears well-positioned for the public markets, armed with stronger margins, improved cash flows, and a scalable logistics backbone built for value-first India.
Source: Financial Express
