According to media reports, sellers are outraged by e-commerce firm Meesho's decision to tighten control over product returns.  These sellers, particularly in Surat, one of the largest hubs for fashion and apparel merchants, have given Meesho negative reviews and ratings on its app and stopped processing orders through the platform.

Meesho changed its product return policy in response to feedback from its third-party logistics partners. Returns are a significant cost area for Indian e-commerce players, as they add to logistics costs. The late-stage startup, which specialises in selling low-cost apparel, home, and lifestyle items, has simplified its return policy at a time when internet companies are cutting costs due to a drop in revenue amid funding winter.

Meesho has consistently attempted to reduce operating costs and conserve cash. Its plans to raise at least $1 billion last year did not materialise due to multiple issues, including a valuation mismatch. Meesho’s sellers have seen sales decline after a bump-up during the festive season last year. Other ecommerce marketplaces like Flipkart and Amazon India have also clocked moderate growth in recent weeks, reports added.

Several ecommerce industry executives have stated that e-tailers have seen an increase in sales during the ongoing Republic Day sale period, though the figures have not yet been fully assessed. A Meesho spokesperson stated that "using anecdotal conversations with a small sample of sellers to infer any trends for the platform is statistically incorrect." 

After implementing thorough checks on returned products at the beginning of the year, the SoftBank-backed firm has implemented technical changes, new barcodes, and video verification of the product packaging. Customers who return products to Meesho are compensated. Returns are more prevalent in the fashion category, with at least one out of every four orders being returned.

According to media reports, Meesho attempted to reduce this on June 2 by offering sellers and customers the option to buy or sell products at a discount without returning them. According to a company spokesperson, Meesho's return policies are "fair and competitive," and third-party logistics providers have no influence on the new policy. 

Meesho's losses nearly quadrupled to Rs 3,247 crore in FY22. Logistics and fulfilment costs increased 4.4 times to Rs 2,829 crore in FY22, from Rs 632 crore in FY21. Meesho's biggest expense is logistics. However, there have been some technical difficulties in implementing the policy, with some sellers claiming that they were not compensated despite receiving tampered products from customers.

To pacify the sellers, Meesho said, "We regret to inform you that your compensation for Order ID: xxx has been rejected. Based on our review of the footage, we cannot see all sides of the product." The rejected shipments will be validated from our backend team.

However, by 2022, the Meta-backed company had shifted its focus and was increasingly selling to end users. As it competed with Flipkart and Amazon, it had to invest heavily in customer acquisition.