Meesho IPO: AWS Dispute, CoD Risks, and the Real Story Behind ₹3,942 Crore Loss

Meesho’s IPO is one of the most talked-about listings in India right now and not just because of its massive scale. The Bengaluru-based e-commerce platform, which has already made online shopping accessible to millions in small towns (23-24% of India’s population with access to the internet), is now facing some big challenges and deep questions around sustainability before going public.

This piece breaks down three major issues investors and regular readers are keen to understand, including the ongoing ₹127 crore dispute with Amazon Web Services (AWS), the growing risks linked to Cash-on-Delivery (CoD) orders, and the enormous ₹3,941.7 crore loss that everyone’s talking about, and why it’s not as disastrous as it seems. The goal is to make these complex issues easy to grasp, with real numbers and facts.

A Quick Look at Meesho

Meesho is a social-commerce platform that lets small sellers, homemakers, and entrepreneurs sell products online through apps like WhatsApp and Instagram. Founded by Vidit Aatrey and Sanjeev Barnwal, Meesho built its success on helping Tier-2 and Tier-3 India take part in online selling without needing warehouses or big marketing budgets. Now, it’s preparing to raise around ₹4,250 crore (fresh issue) through its IPO and could be valued at several billion dollars at listing time.​

The ₹127 Crore AWS Battle: A Costly Cloud Dispute

Before its IPO, Meesho found itself in a legal dispute with Amazon Web Services (AWS). AWS is the platform that provides cloud infrastructure, computing power, data storage, and servers that keep Meesho’s app running.​

In 2022, Meesho signed a two-year contract with AWS called a Private Pricing Addendum (PPA). Under this, Meesho committed to a minimum spend in exchange for discounted rates. However, Meesho later claimed AWS’s services were unstable and caused business disruptions. Due to these problems, Meesho moved its operations to another provider and refused to pay the full committed amount.

AWS is demanding around ₹127.45 crore (or about $14.44 million) in unpaid bills. Meesho, in turn, counterclaimed ₹86.5 crore (roughly $10.4 million), citing business losses, migration costs, and inadequate service support. The case is currently pending before an arbitral tribunal in New Delhi.​

For now, it’s a contingent liability - a possible future expense if the ruling goes against Meesho. But for investors, the timing is awkward, as it raises questions about vendor management right before listing.

The CoD Problem: Risk Hidden in Plain Sight

Cash-on-Delivery (CoD), paying in cash when the product arrives, sounds convenient for customers, especially in smaller towns. But for a company like Meesho, it’s expensive, risky, and complicated to manage.

In FY23, 88.71% of Meesho’s shipped orders were CoD. This dropped to around 75% in the June 2025 quarter, still a high figure by e-commerce standards. For perspective, most major platforms like Amazon and Flipkart handle far more prepaid transactions, which are faster and cheaper to process.​

Here’s why this matters:

• Many customers refuse CoD packages on delivery, leading to higher “Return to Origin” (RTO) costs. Basically, Meesho pays for delivery in both directions without earning anything.
• The success rate of CoD orders (delivered and accepted) is just 75.55%, compared to 96.33% for prepaid orders.​
• Handling cash increases risks of theft, delay, and vendor fraud. In fact, Meesho filed complaints against 35 logistics vendors in 2024 for not depositing collected CoD money.​

The company is working to fix the issue by offering incentives for prepaid orders, using UPI, and limiting CoD options for customers who repeatedly cancel orders. Still, with over three-fourths of its buyers choosing CoD, the challenge remains significant.

The ₹3,942 Crore Loss: Not What It Looks Like

When headlines scream that Meesho lost ₹3,941.7 crore in FY25, it sounds alarming. But when you dig deeper, most of this loss came from one-time restructuring and tax costs tied to its corporate reorganization.​

Let’s break it down:

• Operational loss (before exceptional items and tax): ₹108 crore.
• Total reported loss (after exceptional items and taxes): ₹3,941 crore.

So where did the rest, roughly ₹3,833 crore, come from? Mostly one-time taxes related to its “reverse flip” (re-domiciling Meesho from the US to India) and internal restructuring. These include:

• ₹1,346 crore in reorganization costs.
• ₹2,486 crore in tax due on the business combination.​

These are not recurring expenses. Once they’re done, they don’t return. That’s why analysts point out that Meesho’s operational performance actually improved sharply; its business loss shrank from ₹314 crore in FY24 to ₹108 crore in FY25, showing steady progress toward breakeven.

For more details, visit Meesho’s IPO page here.

The Bigger Picture: Balancing Growth and Risks

Despite these challenges, Meesho’s fundamentals look stronger than ever:

• Operating revenue rose 23% year-on-year, reaching ₹9,390 crore in FY25.​
• Free cash flow turned positive at ₹1,032 crore in FY25, rare for an Indian e-commerce platform.​
• The company shipped over 1.59 billion orders in FY25, proving huge scale.​

But the mix of legal fights, CoD dependence, and tax adjustments shows that scaling fast also brings growing pains. Investors seem optimistic, yet careful. If Meesho can reduce CoD reliance, settle its AWS dispute, and maintain operational profitability, it will emerge as one of India’s most efficient “value-first” marketplaces.

Also Read: Meesho IPO Gets SEBI Nod: India’s Value E-Commerce Leader Prepares for ₹6,600 Crore Market Debut

Key Takeaways

• Meesho’s AWS dispute over ₹127 crore is unresolved but fully disclosed and legally contained.
• CoD still makes up about 75% of orders, creating cash-flow stress and logistics issues.
• The ₹3,942 crore loss in FY25 was mostly a one-time clean-up cost, not an ongoing problem.
• Operational losses have dropped sharply, and free cash flow is positive, suggesting Meesho’s core business is healthier than headlines suggest.

In simple words, Meesho is in a cleanup phase ahead of its IPO. It’s tackling old problems while quietly becoming one of the few e-commerce companies in India to edge closer to profitability. For long-term investors, that’s a story worth watching.

Disclaimer

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