Social commerce is on its way to becoming a more “formal” mode of shopping for Indian consumers, a report by Jefferies said as fashion, jewellery, beauty, and personal care gain from sales through social reselling, group purchases, and video-based buying.
Social commerce in India is still small at only $1.5-2 billion, with Meesho being the largest player for all types of social commerce combined, the report said. However, aided by smaller towns, accelerated adoption and proliferation of new platforms, social commerce is set for growth. “Social commerce, which combines commerce with social media, is in its infancy but has potential to become mainstream. Forays by Reliance and Tata Group are already causing tremors in the e-commerce ecosystem and social commerce has the potential to further proliferate,” it said in a note on the sector.
A chunk of India’s retail market is still unorganized. The share of e-commerce in the overall market is only 5%, according to the note.
Jefferies identified social commerce to include a range of shopping experiences, including group purchase wherein consumers come together to buy in bulk and get better rates. There is also social reselling,where resellers buy from large merchants and sell on social networks. There is also video-based commerce, where videos are used to create awareness.
“Strictly speaking, social commerce is not new. Several merchants already use chat apps such as WhatsApp to facilitate online shopping, though this is more informal. The formal social commerce journey has also begun in India and multiple players have emerged offering different concepts. The largest player is Meesho, which has the lion’s share in this rapidly growing market,” it said.
Social commerce has become popular with more Indians moving online and discovering new ways of shopping.
Companies like WhatsApp and Instagram are monetizing too, as are a clutch of startups such as Meesho, Mall91, Shop101, Dealshare, and Bulbul.
Meesho connects producers with resellers, who eventually market the products to consumers through WhatsApp and Facebook. It gained unicorn status in April after raising $300 million in a new funding round led by Japan’s SoftBank Group Corp. Meesho offers services such as payments and logistics to resellers, which enables ease of transactions, Mint reported earlier. It has more than 45 million customers.
On Tuesday, venture capital firm SOSV, along with incubator and accelerator Venture Catalysts, participated in a pre-series funding round in social e-commerce startup KikoTV, a live-streaming platform that enables users to virtually shop, sell, and discover goods.
An earlier report by Bain and Co. and Sequoia India pegged social commerce in India to touch $16-20 billion in gross merchandise value over the next five years.
Adoption has been gradual in India, but covid could lead to a quicker adoption of multiple online selling models. Several key drivers are in place for social commerce to grow in India, Jefferies said. However, e-commerce penetration is still lagging social media penetration.
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