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Eyeing non-metros, first-time buyers, e-tailers foray into social commerce

Products listed on these platforms typically include unbranded or lesser-known brands that are bought by resellers from these marketplaces to get sold on their social channels to individual customers.

Written by Pranav Mukul | New Delhi |
Updated: January 31, 2022 8:20:10 am
social commerce, Facebook, Meesho, e-commerce, Dealshare, Mall91, SimSim, Flipkart, Google, India news, Indian express, Indian express news, current affairsThe fundamental differentiator of purchasing power between the urban online buyer stationed in metro and tier-I cities, and the lower ticket size generating buyer in the rural and tier-II+ towns is what is driving e-commerce firms to jostle in the social commerce jungle to deepen penetration in non-metro segments. (Representational)

The social commerce model — pioneered by Facebook-backed unicorn Meesho and which essentially connects buyers and resellers — is seeing a surge in the number of non-traditional e-commerce companies mushrooming across the country. These include Dealshare, Mall91, SimSim (which was acquired by Google’s video streaming platform YouTube), among others. The biggest conventional name to enter the space happened in July last year when Flipkart launched its Shopsy app, with a catalogue of 15 crore products across categories such as fashion, beauty, mobiles, electronics and home.

Products listed on these platforms typically include unbranded or lesser-known brands that are bought by resellers from these marketplaces to get sold on their social channels to individual customers. The fundamental differentiator of purchasing power between the urban online buyer stationed in metro and tier-I cities, and the lower ticket size generating buyer in the rural and tier-II+ towns is what is driving e-commerce firms to jostle in the social commerce jungle to deepen penetration in non-metro segments. However, retail sector experts believe that a replication of the Chinese success in the social commerce space may depend on India’s ability to support this business with manufacturing capabilities.

Among the global names to enter the space, Singapore-based consumer internet company Sea Group’s e-commerce platform Shopee has stormed into the segment. Having launched only in November 2021, the app has become the second most downloaded free app on Android platforms in December and January, according to SensorTower data.

The small-town placement of these social commerce apps, through which they are essentially looking to target first-time online buyers, has been witnessed in the numbers recorded. Meesho, for example, in 2021 saw that 71% of all new users came from Tier 3+ regions like Malkangiri in Odisha, Baikunthpur in Chhattisgarh, Munnar in Kerala, Mankachar in Assam, Khalari in Jharkhand, Lalganj in Uttar Pradesh and Mahua in Bihar.

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“There have been some models in China relying on social commerce that have been very successful. People use social media channels to aggregate demand. Theoretically, in this model, you only manufacture or source after you have aggregated a minimum quantum of demand. Pinduoduo has been very successful in China in this model. Within India, what we’ve seen is the model being copied with a distinction from China that the purchasing power there is significantly higher than India, and secondly the supply chain and penetration of e-commerce in China is much better,” Arvind Singhal, chairman and MD of retail advisory firm Technopak told The Indian Express.

“In India, even when you go to the middle-income group the purchasing power significantly falls. The discretionary spending power even more so. Many of these startups have the wrong idea about the addressable demand in India and the challenges in aggregating demand and delivering the products. Furthermore, Chinese supply chains are very efficient — a benefit that a company like Pinduoduo derives,” he added.

While the market split of online buying is still heavily in favour of traditional e-commerce companies, compared to social commerce platforms, majority of the growth, even globally, is being tapped by the social commerce companies. According to a RedSeer report, during the Black Friday sale of 2020 in the US, leading social commerce company Shopify clocked $5.1 billion in gross merchandise value, while Amazon was slightly lower at $4.8 billion.

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A significant issue being flagged with this model is the rampant incidences of fake and counterfeit goods being delivered through the platforms, given that there’s little or no control over the supply chain and inventory. Most recently, according to reports, an FIR was filed against Shopee in Lucknow by a complainant alleging duplicate products being delivered from the platform.

In response to a set of queries sent by The Indian Express, a statement from Shopee noted: “Shopee is a Singaporean company committed to helping Indian small businesses thrive through our online e-commerce marketplace. We aim to partner in India’s digital economy mission while contributing to the Aatmanirbhar Bharat Abhiyan. We are humbled that thousands of local sellers are already growing their online business on Shopee”.

“The sale of counterfeit items, and other products that infringe IP, is strictly prohibited on our platform. We require our sellers to be compliant with both local regulations and our own policies. We also employ various proactive screening measures to identify listing violations, and we provide procedures for IP holders to request takedowns of infringing listings,” it added. In India, the next frontier being targeted by these social commerce companies is the grocery space, where many of them including Flipkart and Meesho have marked their presence.

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First published on: 31-01-2022 at 03:00:24 am

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