Social Commerce The next frontier of online Commerce in India – Burning Issues – Free PDF Download

What is Social Commerce?

• Social commerce is a subset of electronic commerce that involves social media, online media that supports social interaction, and user contributions to assist online buying and selling of products and services.
• Briefly, social commerce is the use of social network in the context of e-commerce transactions.

Various Models for S-Commerce

• Social commerce has several models, one being video commerce, which includes one to many interactions by brands/influencers via live streams/pre-recorded videos. Video commerce is used by Indian startups such as BulBul and SimSim.

• Social commerce can also mean commerce that is facilitated by social networking platforms such as Facebook and Instagram, which are increasingly being used by buyers and sellers.
•  Both platforms have also come up with features — Facebook Marketplace, Instagram Business — to enable online commerce for buyers and sellers.

•  Besides these, social reselling, such as the model being used by Meesho, GlowRoad and Shop101, conversation or chat-led commerce and group buying, as being enabled by DealShare and Mall91, are also popular modes of social commerce.

•  According to the report, new social commerce platforms such as those mentioned above, Meesho, DealShare, BulBul and others, had a GMV between $500-$700 Mn in FY20.
• Of these, Meesho-like reseller platforms accounted for $400-$500 Mn, while other social commerce platforms, such as those utilising video commerce and group buying, accounted for $100-200 Mn.
•  Meanwhile, social networking giants such as Facebook and Instagram had a GMV of $1,200-$1,300 Mn for social commerce through these platforms in India.

 S-Commerce is Future of Commerce in India

•  According to a report titled The Future Of Commerce In India by Sequoia Capital India, a venture capital fund and Bain and Company, a global consultancy firm, the next biggest driver for Indian ecommerce will be social commerce.
• A market that is nascent, with $1.5-2 Bn gross merchandise value (GMV) in the fiscal year 2019-20 (FY20) but could scale at a compound annual growth rate (CAGR) of 55-60% to $16-$20 Bn GMV by 2025.

 Promote Entrepreneurship in India

•  According to the report, social commerce has the potential to empower more than 40 million small entrepreneurs across India.
• “Today, 85% of sellers using social commerce are small, offline-oriented retailers who have found that social channels open new avenues for growth. A subset of resellers are often first-time entrepreneurs earning INR 5,000 to 10,000 a month and leveraging the power of their existing social networks to sell to friends and family,” reads the report.

 Why India has potential?

• 2 nd Highest Internet Users
• Social commerce’s potential is underscored by the fact that even with 41% internet penetration, behind China (60%), the USA (89%), Brazil (71%) and Indonesia (46%), India has 572 Mn internet users, second only to China which has 854 Mn internet users.
•  3 rd Highest Online Shoppers
•  Similarly, even with just 8% of Indians shopping online, India has 105 Mn online shoppers, ranking third after China (637 Mn with 45% of its population shopping online) and the USA (205 Mn with 62% of its population shopping online).

Rising usage of Social Media Platforms

• The report found that while 8% of Indians or 105 Mn people shopped online in FY20, usage of social and video platforms for purposes such as gaming, music and video streaming and networking is more universal, with even non-transactors of ecommerce spending more than two hours every day online.
• This highlights the inherent potential in merging social media with ecommerce.

Rising smartphone penetration

• According to the Indian Brand Equity Foundation (IBEF), propelled by rising smartphone penetration, the launch of 4G network and increasing consumer wealth, the Indian ecommerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.

Yes, there are concerns in S-Commerce …

•  Meanwhile, in the fiscal year 2018-19 (FY19), Meesho had reported a 19x year-on-year (YoY) increase in its losses, thus exposing some of the chinks in the revenue model for the social commerce startups in India. The losses were attributed to staff salaries, logistics, marketing and reseller bonus programs, discounts, rewards, referrals and other reimbursements. Meesho had also increased its revenue to INR 84 Cr from INR 5 Cr in the previous year.

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