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Social Commerce – The Next Billion-Dollar Market in India Commerce has moved from traditional brick and mortar to online, and now it's moving from websites/app to social media

By Arunraj Rajendran

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From the day startup boom happened to till date, e-commerce is one of the most talked and hyper funded domains in India. Flipkart getting billions of funding, Amazon flushing billions to acquire Indian market, Walmart's entry, Alibaba's betting on Paytm Mall - this space was always on its top. But with these giants struggling with their business model to reach profitability and investors focus shift from GMV to unit economics, startups in e-commerce space is not treated as before.

Although this is not the case with Social Commerce (or s-commerce) startups, as have managed to attract over $100 million funding in the past one year from big fishes like Accel Partners, CDH China, Korea Investment Partners, Vertex, Facebook, Kalaari Capital, Unilever Ventures etc.

So, what is Social Commerce?

Over the past decade, e-commerce has evolved and reformed into various shapes and forms, and social commerce is one of them. Internet penetration, coupled with social media obsession, has paved to this new way for people to buy and sell things online.

Social Commerce is that single point where Social Media and E-commerce meets and collides. Brands and social media platforms are working so closely with customers to create a frictionless experience while buying and selling in Social media platforms.

Commerce has moved from traditional brick and mortar to online, and now it's moving from websites/app to social media.

Social Commerce – The Experience.

Social Media plays a huge role in influencing the purchasing decision of consumers. With gen-z population gaining purchase power to millennials active social media usage, there is no better place for brands to market and reach out. It's not just big brands, but local suppliers, manufacturers and wholesalers are exploring social media to widen their reach.

Social Media platforms have already shown that they are heading towards creating e-commerce experience within the platform. Facebook launched its enhanced ecommerce feature with Facebook MarketPlace, Shop Now stores and Messenger Buy option. Other players are also bringing in e-commerce experiences like Instagram Buy Button (they have already launched option to buy within the platform in the US), Pinterest Buyable Pins, Twitter Buy Button, WhatsApp Business, SnapChat Buy Option etc. Facebook has also recently announced that they are building proprietary cryptocurrency to manage payments and eventually, it will be used in its e-commerce features.

The youngster group who grew up on Social Media are impatient when it comes to loading speed of website and there are "n' number of business cases to prove this statement. And if brands can offer the same experience of buying from their website within social media platforms, there is nothing like that.

It makes impulse buying behaviour much more comfortable and fast.

Why startups should care about Social Commerce.?

Social Commerce model is successful than traditional e-commerce model because it reduces the cost of overheads, operations and marketing while increasing reach and sales through the reseller network.

Social Media has deep penetration to Tier II, III and IV markets in India. More and more local manufacturers, suppliers and wholesalers are looking forward to expanding their presence in social media for the very same reason of getting access to millions of users.

It is clear that a large pool of ready customers and lower overheads are going to attract investors and the adoption of social commerce is going to increase in the coming days.

Social Commerce in India.

Few notable startups like GlowRoad, Meesho, Shop101, Shopmatic, Udaan etc. are exploring social commerce space in India. All these startups are in early growth stages and has relatively good pie of market share with GlowRoad and Meesho being the market leaders.

From my recent conversation with Kunal Sinha, CEO and Founder of GlowRoad, he stated that they are clocking 25000+ transactions every day and managing 6mn resellers in their platform in just 2 years. Also their customer acquisition is just $3 compared to traditional e-commerce acquisition cost of $9-10, this is mainly because their resellers are also their brand ambassadors.

In last 1 year, Social Commerce startups have raised over $100mn funding and have onboarded over 10mn resellers in the platform. Primarily these resellers are from Tier II, III and IV market, and interestingly, 1.8 million women are selling $8 billion worth of goods socially in India, and it is estimated that 30 million women will be part of social commerce by 2022.

Why Social Commerce is the next billion-dollar market?

It is expected that by 2018, social media users in Asia has surpassed 1 billion, with smartphone ownership of 88% and internet access of 92%.

PayPal's report on Social Commerce shows that, while surveying small business owners, 79% prefer selling through Social Media. Across Asia, India emerged as the top market in terms of using Facebook, WhatsApp, Twitter and YouTube to sell goods and services.

When it comes to traditional e-commerce Customer Acquisition and Retention are the most cash burn stage in the funnel. Whereas in Social Commerce, users are already in the platform, and social media players are taking the effort the bring awareness on Commerce.

The e-commerce sector will continue to grow, recent market research predicts that the e-commerce market in India would be worth $220 billion by 2025, and social commerce has the potential to become $100 billion market.

Social Commerce is here to stay.

Several social commerce players like Pinduoduo (Net Raise: $3.3bn), Yunji (Net Raise: $155mn), Kuaishou (Net Raise: $418mn), Carousell (Net Raise: $126.8mn) have already shown potential in SEA region.

There is a huge unorganized market of suppliers and manufacturers in Tier II, III, IV cities of India. The only concern for e-commerce players was to expand to over there without discounting/cash burn model, and now that social commerce startups have already shown its potential to explore the unexplored market at a way lesser cost, the puzzle is more or less solved.

It does prove that the rise of Social Commerce is inevitable and it is the future of e-commerce in India.

Arunraj Rajendran

Brand Marketer

Ex-entrepreneur. Currently exploring Social Commerce space in India. I specialize in Growth Hacking, Brand Marketing and Content Marketing.

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