Would you trade return convenience for a lower price? Meesho’s innovative pricing feature puts the options in your hands, offering the prices for those who value affordability over returns.
Meesho, a leading e-commerce platform, is committed to providing the best value for its users. To achieve this, the product team at Meesho introduced a feature that allows customers to choose between two price points—one with easy returns and one without.
This user-centric approach has not only lowered prices but also reduced return rates, driving significant business growth and improving the customer experience.
The product manager and the team are featured as one of Upraised's top 50 Game Changers in 2024.
The Problem: High Return Rates Leading to Higher Prices
The product team identified that online sellers often face the challenge of high return rates, which are frequently driven by customer preferences rather than product issues. Common reasons include:
- Change of Mind: Customers decide not to keep the product after purchase.
- Unmet Expectations: Products not matching personal preferences, despite being accurate.
To offset these frequent returns, sellers typically add price buffers, increasing the overall cost for users. This dynamic created a barrier for price-sensitive users, preventing Meesho from being the lowest-price platform.
The Solution: Two Pricing Options for Users
The product team at Meesho tackled this issue by giving sellers the ability to set two price points—one with easy return options and one without. Customers could then choose their preferred option based on their priorities.
Key Features of the Pricing Model
Choice-Driven Pricing
- Users can opt for lower prices if they forgo the convenience of easy returns.
- This helps users to make decisions based on what matters most to them: affordability or flexibility.
Sellers’ Price Flexibility
- Sellers reduce buffers for orders without easy returns, leading to overall lower product prices.
Encouraging Thoughtful Purchases
- By offering lower prices for no-return options, the model incentivizes users to make more deliberate purchasing decisions, reducing unnecessary returns.
Impact: Affordable Prices, More Orders, and Higher Retention
The feature has delivered substantial results for both Meesho and its users:
- Delivered Orders: Over 30% of delivered orders on Meesho now fall under the lower-price, no-return option.
- Realized Price Reduction: The overall price reduction has made Meesho a more attractive platform for price-sensitive users. The realized price reduction is >6%.
- Incremental Orders: Lower prices have driven a significant increase in order volumes. The orders have increased by ~8%
- Return Reduction: Returns have decreased by ~10%, improving operational efficiency and seller satisfaction.
- Increased User Retention: Customers appreciate the affordability and flexibility, leading to stronger loyalty and repeat purchases.
The Team Behind the Innovation
Gagan Mahajan: Director-Product, Meesho
Gagan and his team were working to make Meesho the marketplace with the lowest prices. On speaking with sellers, they learned that return costs are worked in the final price of the product when listing. To solve this Gagan launched an Opt-out of Easy returns feature, where users got additional discounts and could only return if the product was wrong or defective. This made it a win-win for the buyer, seller & Meesho.
As a part of Upraised’s Game Changers, we're on a mission to celebrate high-impact problem solving & celebrate the individuals who brought these innovations to life.
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