Daybreak - Meesho’s success story is written in cash but investors now see risk

Episode Date: October 22, 2025

Meesho is preparing for one of India’s most watched IPOs. The company built its success in small-town India, where trust matters more than speed. Over 75% of its orders are still paid in cash on delivery. That approach helped Meesho win millions of new shoppers and grow faster than bigger rivals. But it also ties up cash and squeezes margins, making investors uneasy. Now Meesho is working with Razorpay to encourage more prepaid payments and faster settlements. But can a company that grew by trusting cash-first customers convince them to go digital without losing their loyalty?Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon, Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. It is 2025 and one of India's largest e-commerce companies still runs mostly on cash. Mishu, the startup that grew from WhatsApp resellers into a nationwide shopping app is heading to the public market soon, and its IPO could be among the most closely watched listings of this year.

You see, by last year, that is, 2024, Mishu had nearly 175 annual transacting users, which was up by 25% from the previous year, and it was handling nearly 4 million orders a day. What's more, most of that growth did not come from the metro cities. It came from Tier 2 and Tier 3 India. Buyers who do not see e-commerce as a default habit, but as a small leap of faith each time they click order. And that is where Mishu's story turns interesting. Because while India's e-commerce giants have spent years trying to move users towards prepaid and UPI, Mishu leaned hard into cash on delivery and it won.

Its IPO filing says that more than 75% of its orders are still paid. in cash. Of course, this has helped Mishu reach an audience that nobody else could. But as Mishu prepares to list, the trust that it built by letting customers pay cash on delivery is also what investors flag as a risk. So the question now is, can the e-commerce giant shift those very users and the habits of an entire market towards prepaid without breaking the trust that built its empire? Welcome to Daybreak, a business podcast from the Ken. I'm a host, Nekda Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time.

Today is Thursday, the 23rd of October. To understand Mishu's cash story, you have to leave the metros. Head to Kanpur, to Rajkod, to Guntur, the markets where India's value internet lives. These are not high-ticket one-click shoppers. These are people who might earn weekly, who often share a smartphone in the family, and who, for years, have learned to be cautious with money that moves through a screen. These are towns where online shopping still feels new and reliability matters more than speed. Plus, card and UPI penetration remains low in these areas.

For example, Mishu's average order value is about 315 to 315.15. 50 rupees. That is a Kurta or a kitchen container set, not a flat screen TV. And that small ticket economy runs on two words, which is, let's see it first. An IAM Mehmedabad study found that roughly 65% of India's e-commerce transactions in early 2024 were still COD or cash on delivery. And that is not because people cannot code digital. It is because cash means control. You pay when you trust. By leaning into that behavior, Mishu didn't just sell products, it built credibility. Its social commerce routes, resellers, WhatsApp groups, neighborhood influencers amplified that trust. So while every other platform raised to eliminate COD, Mishu doubled down on it.

And that gamble worked. It brought millions of first-time online shoppers into the fold. So, COD was not really a crutch. It was Mishu's go-to, market engine, the quiet force that turned hesitation into habit. But that same engine that powers trust also strains the machine. More on this in the next segment. The math tells the story. COD orders succeeded 75% of the time and prepaid orders 98%, which means one in four cash orders fail, a refused delivery, a wrong address, a last minute change of mind. Each failure. Each failure. carries a cost, packaging, shipping, and the dreaded return to origin logistics. Essentially, it adds up to thousands of wasted trips and idle inventory waiting to circle back.

And even when orders succeed, cash introduces its own drag. Delivery agents have to collect the money, record it and transfer it back. And sometimes this loop breaks. For example, earlier this year, Mishu filed a police complaint against 35 delivery vendors for not remitting the cash that they had collected. This is a symptom of what happens when thousands of crores of money moves physically across hundreds of cities. And that right here is being flagged as a top investor worry ahead of the IPO. Basically, high COD shares ties up working capital and muddles cash flow visibility.

So, you see, it is a strange kind of a risk, not digital fraud, but this friction of the old world inside a new age company. So while COD drives Mishu's growth, it also drags on its profitability. The more it scales, the heavier this load becomes. And Mishu knows this. That is why it isn't trying to win the COD game anymore. It is trying to outgrow it. More on this and the next segment.

In August 2025, your story reported that Mishu teamed up with Razor Pay to re-engineer how its users pay. The move is both tactical and symbolic. A startup built on cash is now trying to teach millions of small town shoppers how to trust the invisible money that they cannot hold. Now, at first glance, it looks simple. Integrate Razor Pay, add a few payment options, call it transformation. But this isn't just a product upgrade.

It is behavioral economics in motion. Here is what Mishu is actually doing. With Razor Pay, it is building a native checkout that keeps the entire prepaid experience inside the app. No redirects, no extra OTP screens, no hand-off to a confusing bank page. The logic is very clear. Every click is a chance to lose a customer. Second, Mishu is trying to neutralize risk perception. It is promising instant refunds for cancelled or returned orders

and attempt to recreate the emotional safety of COD. If you can see your refund before you start missing the cash, maybe you will pay digitally next time. Third, the company is adding micro incentives, like Razor Pay Powered cashbacks and small credits for first-time prepaid users. In Mishu's data-driven language, these are trust nudges, not discounts. each successful prepay transaction is supposed to chip away at the COD reflex. It is an elegant plan, of course, but a fragile one too.

Because the assumption beneath it is that behaviour follows convenience, that if digital payment becomes easier, shoppers will abandon cash. And that might not be entirely true. For many of Misho's customers, COD is not just about inconvenience or app friction. It is about control. Cash lets them decide when an order becomes real. No amount of sleek UX or cashback can replicate that emotional leverage. So the bigger question is not whether Mishu can build prepaid rails.

It already has. It is whether it can redefine trust in a way that still feels local, familiar and human. And if it pulls this off, Mishu's Razor Pay partnership could do more than just cut logistic costs. It could reset how India's value e-commerce market pays. And if it fails, the company might discover that technology cannot outcote culture. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the Red Support.

button on the top of the website. Today's episode was hosted and produced by my colleague, Niktha Sharma and edited by Rajiv CN.