Is social commerce the next big thing in Indian e-commerce space?

By 2025, Indian e-commerce market is expected to be $220B with social commerce posed to be $100B market. There are 400M+ monthly active users (MAUs) on WhatsApp, while e-commerce sites like Amazon/ Flipkart are restricted to catering to their ~100M MAUs.

Various social commerce models being social reselling, group buying, video led shopping, C2C commerce to social media sites incorporate e-commerce elements.

Opportunity

Social Commerce has chiefly taken off among the mass market, especially within Tier 2 and 3 cities. The bulk of this landscape is actually made up of unbranded long tail, mass market products, where the average order value is often less than INR 250. Households in Tier 2 and 3 cities represent the exact customer persona in terms of income range, high value drive (low brand affinity + cost consciousness) and preference to assisted buying, through someone they trust. As of now, fashion is the most frequently purchased category in the S-comm ecosystem, followed by emerging beauty/ personal care and food and grocery categories.

How are big players catching up to trend?

• #amazon has been tinkering with S-comm since 2017 and has recently turbocharged its entry through Amazon live.
• Conversely, #flipkart has already launched #Shopsy, a zero commission marketplace for sellers and Facebook too rolled out Facebook Shops, to allow brands/sellers to sell online. After experimenting with Live shopping feature, #facebook is ending it on 1st October.
• #snapchat API lens overlay digital images on the real world to create immersive user experiences and allow shoppers to virtually try on products.
• #instagram launched Product Tag, Wishlist, Checkout, Product drop, Product launch tag and Live shopping feature.

With Amazon live videos, e-commerce is bringing a social angle to it. And #instagram with product drop, shop features and one click checkout is bringing commerce angle to it.

Tailwinds in Social Commerce space

1. Low customer trust in online shopping- Amazon choice and Bestseller is often not the best choice and not the most sold-out product. Check out the recent reviews of any bestseller product and you will know it.
2. With IOS update which is doesn’t allow Facebook and Instagram to track you and with google ending third party cookie in 2023 and rising CAC in consumer tech business, Product discovery has become the most important metric for any consumer led business. And social commerce is acting a proxy for trust.
3. Both e-commerce and social media occupy an increasing share of consumer waking hours.
4. Livestream sales, integrated product catalogues, augmented reality try on are the key features of the new age Social Media.
5. Consumer looking for frictionless shopping experience from delivery to checkout.
6. 97% of the Gen-Z use social media as their top shopping inspiration.
7. WhatsApp Business with Catalogue, QR Code etc also feed into the growing social commerce trend.
8. Marrying of AR/VR-Meta with commerce as a trend.

Traction so far

1. Social commerce start-ups have raised more than $1.8B in funding till date. Some notable names being Meesho, CityMall, Dealshare, and Coutloot
2. Glowroad, a social commerce platform, acquired by amazon in an all cash deal in April 2022

“Social Commerce is a word of mouth on steroids”

Where We Stand?

At WaterBridge Ventures, we are extremely bullish on Social commerce given our investment in CityMall. We are most excited about solutions that solve for Product discovery and Trust using Tech play. If you are a founder building in this space or otherwise looking for your first institutional VC cheque, drop me a message on LinkedIn.

What do you think about this? Do share your thoughts in the comments! 😁

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