The Emergence of Social Commerce in the Indian Retail Industry

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Social commerce, a combination of eCommerce with social media platforms, is gaining much traction in recent times. Consumers can purchase goods or services through their social media accounts by interacting on various social media platforms like Facebook, Instagram, and Pinterest. The accelerated growth of the eCommerce industry is one of the biggest outcomes of the global pandemic as it accelerated existing trends and paved the way for businesses to find creative ways to reach customers. Social commerce is a notable alternative as it offers to buy and sell products through a medium of connection and community, which is quite different from traditional eCommerce. Increased smartphone penetration and unlimited access to social media networking sites provide key growth opportunities for the social commerce market.

The Indian social commerce market gross merchandise value (GMV) was valued at US$ 1.5-2 billion in 2020 and is projected to reach US$ 16-20 billion by 2025 & US$ 60-70 billion by 2030. Social commerce market share in India’s eCommerce market is expected to increase to 4-5% of the projected US$ 140 billion markets by 2025. Key drivers for the market growth are increasing consumer preference for online shopping, growing internet users, blooming investments in the eCommerce sector, and rapidly growing social media influence among millennials.

Social media platforms embed colourful buttons or links that are attractive, easy to shop and provide a consumer-friendly experience. Consumers can check product prices on these social media platforms and decide whether they want to purchase or not. In addition, after the purchase, consumers are redirected to the place where they left off on the respective social media app. Social media, an interactive medium, provides consumers preferences and likes based on the pages they like, feedback, or suggestions. Using social media monitoring tools, web searches, and mobile device tracking apps, online traffickers can get information about consumer attitudes and shopping patterns. Businesses can analyse the data to get a complete picture of a consumer, including preferences, influence, transactional behaviour, and psychographics.

The increased usage of social media platforms through smartphones provides businesses information like location, which helps them target consumers geographically in a particular area or city. As fashion is one of the most used retail segments in social commerce, various fashion brands benefit from social media posts, likes, shares, and comments. They may also forecast future trends based on consumer social media activity. Most fashion brands are gaining popularity through influencers representing those brands on social media.

Key players in the Indian Social commerce market are Meesho, DealShare, CityMall, GlowRoad, Mall91, Bulbul, Simsim, Shop101, Udaan, and Shopmatic. Meesho is one of the leading players in the market, which follows a reselling model wherein the suppliers display their product catalogue on the app, and individual businesses will connect with them through Facebook or WhatsApp for relevant purchases. The company has over 50,000 suppliers and 8 million entrepreneurs in India and aims to reach 200 million signed-up users by December 2022.

According to PayNXT360’s Q1 2022 Social Commerce Survey, the social commerce industry in Global is expected to grow by 34.9% on an annual basis to reach US$6,98,295.2 million in 2022. The social commerce industry is expected to grow steadily over the forecast period, recording a CAGR of 32.1% from 2022 to 2028. The social commerce GMV in the country will increase from US$6,98,295.2 million in 2022 to reach US$36,35,373.5 million by 2028. Among these, 25% of consumers are estimated from tier I cities, 20% from metros, and the remaining from tier II & III cities. In India, social media penetration is more in tier II & III cities; hence, millions of small retailers are finding innovative ways to attract consumers from these cities by implementing conversational commerce on chat-based platforms to video-led commerce platforms, reselling models, and group buying networks.

The Indian social commerce industry enables users to instantly explore various brand products from their social media accounts using Artificial Intelligence (AI) driven tools and creating many employment opportunities. The increasing social media penetration, a growing number of internet users, rising investments, reduced overhead expenses, and the increasing number of start-ups are fuelling the growth of the Indian social commerce industry shortly. 

To know more and gain a deeper understanding of the social commerce industry in India, click here.