These social start-ups are riding on the user bases of social media platforms like WhatsApp or traditional media platforms to build e-commerce solutions for the next 200-300 million users in India
Bengaluru: After souring on e-commerce start-ups for more than three years, investors are finally pumping capital again with new companies such as GlowRoad, Shop101, Ezmall and Meesho leading the next wave of e-commerce in India. These social start-ups are riding on the user bases of social media platforms like WhatsApp or traditional media platforms to build e-commerce solutions for the next 200-300 million users in India.
“Social commerce and assisted commerce start-ups are differentiated from the big e-commerce companies like Flipkart and Amazon. They offer a different range of products to consumers and a different kind of customer experience that is more friendly and personalised. Most e-commerce start-ups used to be crippled by customer acquisition that wouldn’t decrease with scale. But social commerce start-ups have lower customer acquisition costs because they tap into existing channels like WhatsApp or Facebook to reach customers," said Rijul Jain, investor at early stage investment fund Astarc Ventures, which has invested in Wooplr, another leading social commerce platform.
India’s consumer internet and e-commerce market exploded in 2014, but so far firms in the space have built their businesses only for the top 50-75 million shoppers in the country. Growth in the sector has also not come at the breakneck speed that companies and investors originally predicted in 2015, at the height of the start-up funding boom. Even Flipkart and Amazon, the biggest e-commerce platforms, have far smaller user bases than social media companies.
Messaging platform WhatsApp and its parent Facebook both have more than 200 million users in India, according to analysts. Using the large user base of these platforms, a slew of fresh social commerce start-ups have given the e-commerce sector a new lease of life. They have also given some investors, who have been looking to fund new e-commerce start-ups despite slower growth rates of the sector, appealing options to put their money into.
Of the emerging social commerce start-ups, Meesho is one of the largest. It connects resellers directly with raw material suppliers and uses WhatsApp and Facebook among other social media platforms. A majority of the resellers on Meesho are homemakers, small business owners, small boutique brands and those who sell art and craft, fashion wear, home and kitchen products, among other categories.
Meesho, along with Shop101 and Glowroad, is one of few new e-commerce start-ups to attract investor attention after venture capital firms’ interest in e-commerce companies started waning towards late-2015. It counts Sequoia Capital, SAIF Partners and Y Combinator among others as its investors and raised $11.5 million in its Series B funding round in June. Meesho is also in talks to raise up to $30 million from DST Global, Mint reported last month.
These platforms appeal to both customers and sellers, executives said.
Shop101, incorporated in 2015 by Abhinav Jain, is backed by Stellaris Venture Partners and Vy Capital, along with TaxiForSure’s co-founder Raghunandan G. and Livspace’s co-founder Ramakant Sharma. Jain, a B-Tech graduate from IIT Kanpur, said the company focuses on people who have very strong intentions of starting a business but limited means to do so. He said he founded Shop101 after discovering that even Flipkart and Amazon India were not reaching small businessmen who wanted to become resellers.
“During our research, I met a decently big seller in Mumbai and asked him how his experience on Flipkart was. He just gave me a blank stare, and we thought that if this is the condition in a metropolitan city like Mumbai, then what would it be like in other parts of the country," said Jain.
Shop101 raised $5 million in Series A funding led by Stellaris Venture Partners in July. GlowRoad, also a platform for resellers, raised $2 million from Accel Partners in its first funding round last year. GlowRoad has 1 lakh users on its platform out of which 93,000 are women, according to Kunal Sinha, the company’s co-founder.
Both start-ups provide platforms where a person can become a reseller by either opting to sell the company’s in-house products or their own. Resellers and entrepreneurs typically start by selling amongst their friends and family.
The kind of resellers that these new social commerce firms target – whether homemakers or small business owners – are those who are unable to provide consumers with basic e-commerce services like cash on delivery (COD). Like major e-commerce firms, the social commerce companies also have logistics partners who help provide resellers such services.
Apart from social commerce start-ups, another fast-expanding new commerce platform is Ezmall, which is funded by the Essel Group. Launched in September 2017, Ezmall has raised $15 million so far from Essel Group, which owns the Zee media empire. Ezmall last raised $10 million Essel in July. The company now plans to raise funds from external investors, founder and CEO Amit Bansal said. Apart from its website, Ezmall uses the wider reach of Zee channels to market its platform and to sell products. It also lures shoppers to make purchases by showcasing its products in videos.
“We are on the cusp of video and commerce and we have a large call centre to help customers place orders. Unlike the current online shoppers, the next wave of consumers may not have the same comfort levels with the kind of shopping experience that Flipkart and Amazon provide. So, it’s important to offer assisted shopping solutions," Bansal said.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!