Meta-Backed Meesho Is Beating Amazon, Walmart in Race for Indian Shoppers

Meesho was the world’s most-downloaded shopping app during the first half of this year, according to app analytics firm Apptopia, with shoppers pointing to its ease of use, wide selection of products and low prices. Some 127 million people downloaded the app, which is available only in India, compared with 81 million downloads for Amazon and 50 million for Flipkart during the period.

Amazon and Flipkart are “more for the top 1%-5% of the population” in terms of income, specializing in more expensive goods such as smartphones and televisions, said Meesho Chief Financial Officer Dhiresh Bansal.

Meesho’s goal is to be the online leader in the simpler goods, such as clothing and household items, often sold in unorganized retail, which accounts for as much as 85% of India’s shopping sector, Mr. Bansal said. The startup caters to the legions of consumers who are used to shopping in corner stores and are now turning to the internet, he added.

Meesho was founded in 2015 and has raised $1.1 billion from investors including Meta, SoftBank Group Corp.’s Vision Fund, Sequoia Capital India and Facebook co-founder

Eduardo Saverin’s

venture-capital fund B Capital Group. Meesho isn’t profitable, but Mr. Bansal said it will be at some point and will aim to list publicly. It is valued at about $5 billion.

Meesho has a way to go to catch Amazon and Walmart, which have together pumped more than $22 billion into India since 2014. Each commands around $20 billion of online sales in India annually, combining for about 60% of India’s total, according to a report from U.S. investment firm AllianceBernstein. Meesho is responsible for about $5 billion, or 7% of India’s total sales.

The American firms entered India eager to capitalize on the hundreds of millions of consumers getting online for the first time in the South Asian country, although the growth of online shopping as a proportion of total retail has been slower than in other big markets. E-commerce still accounts for just 5% of retail sales, well below the 14% global average, according to AllianceBernstein.

India’s e-commerce market is forecast to nearly double to $133 billion in 2025 from $72 billion this year, propelled by consumers in smaller towns and villages, according to AllianceBernstein.

Eighteen-year-old college student Mansi Khajuria lives in a village of several thousand people called Barooki, in India’s northern state of Uttar Pradesh. She has shopped a few times on Amazon but has never tried Flipkart.

She prefers Meesho’s wider selection of goods, frequently buying items such as tops for as little as 99 rupees, or $1.20, and shoes for $1.46.

“Meesho is my Zara,” Ms. Khajuria said, referring to the fashion retailer owned by Spain’s

Inditex

that she has heard about but can’t afford.

Customers open Meesho—its name is a combination of the Hindi word for “my” and the English word “shop”—and browse a TikTok-like feed. It shows mostly unbranded items such as saris, sunglasses and shampoo, many costing less than on Amazon or Flipkart.

Users can order products and pay for them with cash when they arrive at their doorsteps. Shipping is free, and there is no minimum order size. Sellers set their own profit margins. Ms. Khajuria, for example, often sells items to friends via WhatsApp and Facebook, making between 61 cents and $1.22 per transaction.

Meesho generates revenue largely through advertising, with sellers paying to display their items more prominently in the app, similar to one of the ways China’s

Alibaba Group Holding Ltd.

makes money from its popular Taobao shopping service.

Last month Meesho’s app was opened more than 1.4 billion times by its users in India, compared with about 875 million for Flipkart’s app and 570 million for Amazon’s, according to Apptopia.

Amazon, which has invested $6.5 billion in its India operations since launching in the country in 2013, in April entered the social-commerce market itself, acquiring a startup called GlowRoad for an undisclosed sum. An Amazon spokeswoman didn’t respond to a request for comment on Meesho.

Flipkart, which began operating in 2007, last year launched a social-commerce platform called Shopsy. A Flipkart spokeswoman said Shopsy is growing rapidly but declined to comment on Meesho. Walmart in 2018 acquired Flipkart for $16 billion and two years later led a $1.2 billion round of investment in the company.

Other companies also are emerging in India’s developing e-commerce sector. They include ultrafast delivery startups, such as Dunzo and Zepto; local giants

Reliance Industries

and Tata Group, both of which are moving into e-commerce; and the Indian government, which last month began a limited launch of its own e-commerce aggregator.

The aggregator, which incorporates listings from Amazon, Meesho and others, allows consumers to search across platforms, compare prices and make purchases. The government says it is designed to democratize online shopping and empower smaller players. A Flipkart spokeswoman declined to comment on whether the company would be participating.

Ms. Khajuria said she is eager to sell—and shop—more on Meesho this month ahead of Diwali, the festival of lights that is one of India’s main holidays.

“Everyone shops during the festival season,” she said. “With more money, I will shop more.”

—Vibhuti Agarwal contributed to this article.

Write to Newley Purnell at newley.purnell@wsj.com