E-commerce Platform ShopG Raises $1.5 Mn In Seed Round Led By Orios Venture Partners And RPSG Ventures
The funds will be used for expanding the community leader network in tier III and tier IV cities, scaling technology, building a supply of small regional brands, and creating a suite of D2C branded products for customers
Social e-commerce platform ShopG on Wednesday announced to have raised $1.5 million in a seed funding round led by Orios Venture Partners and RPSG Ventures. Angel investors such as Rajesh Yabaji, Raghunandan G, Prasanth Nair, and Alibaba also participated in the round.
Started in Nov 2019, the company has built a social commerce platform powered by micro-entrepreneur community leaders that is changing the way the next 500 million customers beyond India's top cities shop for their daily household needs.
The infusion of new funds will be used for expanding the community leader network in tier III and tier IV cities, scaling technology, building a supply of small regional brands, and creating a suite of direct-to-costumer (D2C) branded products.
“Next 500 million Internet customers, from tier-III and tier-IV cities of India, who earn an average household income of INR 25,000-30,000 per month, prefer assisted buying from someone they trust and have low Average Order Values (AOV) < INR 250; making it impossible for existing e-commerce 1.0 players like Amazon, Flipkart, etc to service them with high customer acquisition, and supply chain costs. Our network of community leaders who are mostly women, inspire trust as well as serve them at zero customer acquisition cost and a ten-times better supply chain. ShopG partners with regional/small brands that offer good quality products, but have had limited distribution reach. These products are made available and aware to customers via the community leaders at great bargains,” said Ankur Arora and Abhishek Mishra, co-founders, ShopG, in a joint statement.
Today, the company claims to have more than 1000 community leaders serving over 1 lakh customers in a single-tier III city and the business has proven profitability in the city.
“Social commerce is currently at $1.5 billion - $2 billion in India and will scale to $25 billion by 2025 or earlier on the back of smartphone ownership that has crossed 500mn in 2020 accelerated by COVID. Most of this growth has come in tier-III cities like Solapur, Bareilly, or a Tumkur. In China, social commerce makes up nearly 12 per cent of retail and has created 4 unicorns over the last 5 years with more than 20 funded companies. The growth took off with growing smartphone penetration which is bound to happen in India as well. Daily household needs comprise the largest chunk of this. We are excited to partner with the ShopG team which has developed a profitable model bringing the power of micro-entrepreneurs, digital-ready customers, and a tailored set of small brands including their own, on a common tech platform,” added Anup Jain, managing partner, Orios Venture Partners.
The company maintains that it has built a deep customer analytics engine that defines clear actionable next steps to help grow CL’s businesses with minimal effort. The CL lifecycle from onboarding to managing orders, delivery, and earnings is gamified which results in CL loyalty and stickiness.
“We are very confident about the growth potential of social commerce in India. With smartphones and the internet penetrating the smaller cities in India, this TAM is now more receptive to transacting online and buying branded products provided the platform is able to instill trust and authenticity. ShopG’s business model offers a unique way of providing this and services to the low AOV tier-III and tier-IV customers with industry-leading CACs and logistics costs. We are thrilled to partner with the ShopG team who has created a sustainable business model utilizing a strong network of community leaders. We are also very excited about the opportunity for ShopG to leverage their reach and understanding of what customers want in tier-III and tier-IV cities of India to launch a number of private-label brands such as Ohayo,” shared Abhishek Goenka, head and CIO, RPSG Ventures.
The company has also said to have identified a price-quality gap in the skincare segment and launched a D2C owned brand named ‘Ohayo Natural.’ With industry-leading unit economics, the platform is now looking at a scale in more than 300 cities in the next three years.
The social commerce platform is currently at $1.5 - $2 billion in India and will scale to $25 billion by 2025, according to a recent Bain report.