Social media platforms lead social commerce in India: report

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New Delhi: India’s social commerce market, valued at $ 800 million, is largely driven by social media platforms such as Instagram, Facebook, WhatsApp, Trell and Chingari. These platforms dominate 65% of the social commerce market in India, the rest belong to e-commerce platforms such as Meesho, GlowRoad, Dealshare, Shop101, according to a recent report by consultancy firm Wazir Advisors.

“Right now, social media-driven commerce is dominated by international brands like Facebook, Instagram and WhatsApp, which have also been the early players in this segment. However, India-made social media apps such as Roposo, Trell, Chingaari, MX TakaTak, Moj, most of which have appeared in the past 1-2 years, are also looking to enter the social commerce space to grab the opportunity ”, Pakhi Saxena, Practice Leader, Retail and Consumer Packaged Goods, Wazir Advisors.

Social commerce has emerged in markets such as China and India, built as a buying platform parallel to large e-commerce markets. Social commerce is actually a subset of e-commerce that uses social networks, peer-to-peer communication, and online media that support social interaction to facilitate the online buying and selling of products and services. services.

Various models have also emerged, including a reseller model, group buying and video trading.

These channels largely target buyers in small Indian towns and mainly deal with unbranded products such as clothing, beauty and personal care products, footwear, electronics and home utilities, according to the report.

However, the pandemic has helped accelerate the shift to social commerce channels, he said.

While the e-commerce industry grew 45% in 2020, currently only one in seven people with internet access makes purchases online, according to the report.

This is because the big markets are not accessible to buyers in the smaller towns of India. Additionally, the first digital brands of the new era are appearing in all categories, prompting them to use non-traditional channels such as Facebook and Instagram to market.

That said, the report is boosting the growth of social commerce in India.

Meanwhile, the sector has attracted the interest of investors. Most of the platforms, including Meesho, Trell, DealShare, GlowRoad, have raised funds in the past 12 months. Meesho, with 75 million total app downloads, raised $ 570 million in September, valuing the resale platform at $ 4.9 billion.

But the shopping routine is also fraught with pitfalls. On the one hand, the typical order size on these platforms is quite small, which makes it difficult for large ecommerce marketplaces to participate in the market. The report found that the average order value of these transactions was less than ??250. In addition, existing players find it difficult to retain resellers and influencers.

The report estimates that 55% of the customer base is from Tier II and III cities and contributes nearly 80% of the gross value of goods. Meanwhile, the report states that the big incumbents such as Amazon, Flipkart have not been able to meet the needs of customers in Level II and IV markets in a more targeted manner.

“Although these companies have established a scope on most PINs in India, but due to their high cost structures and high customer acquisition costs, they are not able to serve as many customers in these regions looking to purchase low value unbranded products. elements. However, these companies are now taking various steps to reach this set of customers through various initiatives, ”said Saxena.

Saxena said that given the success of social commerce in China and the similarity of social structures in China and India, the Indian social commerce industry should be able to repeat the success even as traditional e-commerce gains momentum. ‘magnitude.

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