Why social e-commerce works in India, and in particular in Bharat

In the middle-class neighborhoods of small towns, a practice is growing in the months leading up to the end-of-year celebrations: an enterprising person, usually a woman, buys saris and fabrics wholesale, then, thanks to a intelligent marketing and word of mouth, sells them in the neighborhood using his house as a base. There are many reasons why buyers, especially women, flock to this informal store: the selections are tailored to their tastes and needs, they are comfortable with and trust the seller, and the seller. Often offers discounts and installment payment programs. they wouldn’t get traditional brick and mortar stores. At the end of the day, everyone comes home happy.

This is the exact model that social ecommerce apps like Meesho, DealShare, BulBul, and GlowRoad are replicating, and it’s one of the reasons social ecommerce is so successful in India and beyond. regions of Asia. In fact, unlike most other e-commerce models, which we have adapted from Western markets, this is a trend that is catching on in the United States. Earlier this month, US tech magazine Fast Company ran an article titled This $ 360 Billion E-commerce Trend Is Huge In Asia — And It’s Coming To the US Next, by Vinnie Lauria, who runs a private equity firm. risk (VC) based in Singapore.

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While Flipkart and Amazon pride themselves on their product line, these apps focus on their curation; they know that many of their customers are first-time internet users who need an easier-to-navigate application that doesn’t have a confusing depth of information. They’re also lighter and faster, designed for use on entry-level smartphones and patchy data networks. Language is another factor that sets them apart from the biggest players in e-commerce: the default language for most of them is adapted to the user’s local language.

Vidit Aatrey, founder and CEO of Meesho, 6, who became a unicorn this year, explains the phenomenon. “Nine out of 10 people in India dream of starting their own small business, but starting a business takes a lot of capital. People who never had the opportunity to start a store came to our platform and became entrepreneurs for the first time. They could start their store on WhatsApp, access anything in our supplier marketplace, and only buy the items they received orders for. Meesho has more than 15 million micro-entrepreneurs in its network, 80% of whom are women from small towns.

According to a December 2020 report by management consulting firm Bain & Company, social commerce in India is expected to reach $ 16 billion to $ 20 billion (approximately ??1.2 to 1.5 trillion) by 2025 and $ 60-70 billion by 2030, while social commerce share in India’s e-commerce market is expected to register a compound annual growth rate (CAGR) 65% between 2020 and 25.

“Social commerce has also presented a cost-effective alternative for large companies and brands under the pressure of increasing customer acquisition costs and struggling to protect these valuable customers from competitors who continually woo them with deep discounts,” Ankur writes. Pahwa, e-commerce and consumer internet leader at EY India. “Social commerce, because of its close association with social media, has inherent advantages when it comes to engaging and retaining customers,” he adds.

So while this is still a small size of the overall ecommerce pie, it is an early stage industry that is expected to grow exponentially. On the one hand, non-existent just five years ago, the sector recorded revenues of $ 554 million in 2020-2021, a seven-fold increase from the previous year, according to data from analysts Venture Intelligence.

Aatrey says that the problems of unorganized retail in Tier 2, 3 and 4 regions are typically different from the issues of the organized segment in Tier 1 subways and cities. “Unlike metropolises and Tier 1 cities, product purchasing decisions in level 2+ regions were always based on trust, whether it was the local mom-and-pop store or the local entrepreneur who bought products and sold them to their community friends and family. . In a way, social commerce has always been around and access to digital resources has only given it greater reach and scale, ”says Aatrey.

He attributes Meesho’s success to a simple and early idea: over 90% of India’s retail market is unorganized and targets customers whose buying behavior is very different from theirs. level 1 and metropolitan counterparts.

DealShare, a Bengaluru-based startup, uses social e-commerce to deliver deals on essential purchases such as groceries and everyday groceries. Their technology is also aligned with this, explains Rajat Shikhar, DealShare director of products. “We don’t have a large catalog. We focus on localized demand – what kind of food and groceries are sold in what region – and we remain inventory-frugal unlike the bigger players in e-commerce.

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The nudge factor also comes into play when you buy through someone you know socially, and this is again something that sets social e-commerce apart from its traditional counterpart, says Prashanth Prakash, partner of the leading venture capital firm Accel, which has invested in GlowRoad in this category. “In addition to trust, curation and nudge play an important role in buying decisions in these markets. Someone you know tells you to buy and also helps you buy it by teaching you how to use the internet, maybe for the first time. This integration is an important step ”, explains Prakash. He believes the lack of organized retail penetration, both online and offline, beyond the top 100 postcodes in India has been a huge factor in the success of this “very dynamic” industry.

“We have micro-influencers in all markets, and social is their gateway to the Internet, unlike a previous generation of Internet users who discovered it through research or email. Of course, social is also their favorite way to shop, ”says Shikhar.