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Why Is Facebook Investing in Meesho?

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Jun. 17 2019, Updated 11:44 a.m. ET

Facebook backs Amazon’s Indian rival

Facebook (FB) is investing an unspecified value to purchase a stake in Indian e-commerce startup Meesho, according to a Reuters report. Meesho was founded four years ago. The company is involved in “social commerce.” Meesho helps link up sellers with prospective customers on social media platforms. Meesho has attracted ~2.0 million sellers mainly across India’s smaller cities and towns.

Facebook’s investment in Meesho is another move by a US multinational to back Amazon’s (AMZN) rival in India. Last year, Walmart (WMT) invested $16 billion to purchase a controlling stake in Flipkart—Amazon’s fiercest competitor in India’s e-commerce scene. Microsoft (MSFT) and eBay (EBAY) teamed up with Chinese social media and mobile payment giant Tencent (TCEHY) to invest $1.4 billion in Flipkart. Later, eBay sold its stake in Flipkart to Walmart.

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Facebook enters the race in India

The investment in Meesho shows Facebook’s growing interest in the e-commerce business. Facebook has built a shopping platform into its flagship social network. Businesses and individuals can list items for sale on marketplaces similar to Amazon and eBay. Facebook allows its Instagram app users to shop for items and make purchases within the app. Facebook is about to unveil a digital currency that people will be able to use to settle payments with online merchants.

With the Meesho investment, Facebook has entered the race for a multibillion-dollar revenue opportunity. India’s e-commerce market was valued at $32 billion. India’s e-commerce market is expected to grow to $72 billion by 2022, according to eMarketer estimates.

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