The growing competitive landscape in the Indian social commerce market

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In India, the rising internet and smartphone penetration rate is fuelling the growth of the e-retail market. Consumers, especially from Tier III and IV cities, have turned to online channels for completing their purchases ever since the global pandemic outbreak. Furthermore, the robust logistics and supply chain network created by players in the online commerce market has also assisted the rise of e-retail in the country over the last few years. Now, the growing trend of online shopping is gradually shifting from traditional e-commerce channels to social commerce platforms.

This gradual shift is driving the competitive landscape in the Indian social commerce industry. According PayNXT360 estimates, the live commerce market in India will see a gross merchandise value of US$15 to US$18 billion by 2026 with social commerce accounting for a significant portion of this sector. Of this, fashion is projected to contribute 45%-55%, whereas about 24%-32% will go towards beauty and personal care. Notably, many of the leading consumer-focused brands have dipped their toes into social commerce, especially during the 2022 festive and holiday shopping season. For instance,

• SUGAR Cosmetics, a beauty-focused brand in India, partnered with e-commerce marketplaces such as Myntra and Nykaa to participate in live commerce sessions. With promising results at hand, the firm announced the plan to launch a live commerce app of its own by the end of 2023.

While the live commerce market is still in its early stages of development in India, a growing number of e-commerce marketplaces are investing in the space, as they see social commerce as the future of commerce in India. For instance,

• Flipkart and Amazon, two of the leading e-commerce players in the country, have all forayed into the live commerce segment. Notably, Flipkart partnered with automakers such as Ampere, Bounce, and Hero to showcase a range of electric two-wheelers. As of November 2022, over seven million consumers and many brands across industries have participated in live commerce sessions conducted by Flipkart, since it was launched four months ago. According to Flipkart, the interest in live commerce is especially higher among consumers from Tier II cities and beyond.

On the other hand, Amazon partnered with 150 content creators to launch its live commerce feature, Amazon Live, in September 2022. With the projected growth in the live commerce segment, innovative startups are further driving the social commerce competitive landscape. These startups are raising funding rounds to further build their product and technology. For instance,

• In October 2022, Shopr.tv, a live commerce startup, announced that the firm had raised US$1.7 million. Investors such as Beenext and Y-Combinator participated in the fund-raising round raised by Shopr.tv. Notably, the firm is planning to use the capital for product and technology development.
• Frendy, a women-focused social commerce startup, announced that the firm had raised US$3 million in an extended Series A round in March 2022. With over 4,500 products and operations in 25 cities, at the time, the firm is planning to use the capital to further scale its operations in the country.

The trend of funding raising is not just limited to startups. Even bigger players in the social commerce market are raising funding rounds amid the growing competitive landscape in the Indian market. For instance,

• In September 2022, Meesho, one of the leading social commerce players in the country, announced that the firm had received US$192 million from its parent entity to further drive business growth during the 2022 festive season. In September 2021, the firm also raised US$570 million in an investment round led by B Capital Group and Fidelity Investment.
• DealShare, another leading player in the Indian social commerce space, has raised funding rounds in 2022. Notably, in February 2022, the firm announced an investment of US$45 million in a Series E funding round from ADIA, which valued the startup at US$1.7 billion. A month before, in January 2022, the firm also raised US$165 million from Tiger Global and Alpha Wave.
• To further capitalize on the growing social commerce space in the country, the firm is now foraying into the private label segment. In November 2022, DealShare announced that the firm will be investing US$60 million in the private label business over the next three years. Currently, it serves more than 20 million customers in over 150 cities through its hyper-local e-retail business model.

With the social commerce market projected to further grow in India over the next three to four years, PayNXT360 expects leading e-commerce players such as Flipkart and Amazon to also increase their investment at an accelerated pace from the short to medium-term perspective. The projected rise in the number of online shoppers over the next few years will further drive competition for market share among these players. Moreover, with direct-to-consumer brands also looking to foray into and capitalize on live streaming, competition in the Indian social commerce market is projected to grow significantly from the short to medium-term perspective.

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