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New Delhi: India’s social commerce market, pegged at $800 million, is largely driven by social media platforms such as Instagram, Facebook, WhatsApp, Trell, and Chingari. These platforms dominate 65% of the social commerce market in India, the rest lies with e-commerce led platforms such as Meesho, GlowRoad, Dealshare, Shop101, according to a recent report by consulting firm Wazir Advisors.

“The social media-led social commerce at the present moment is dominated by international brands such as Facebook, Instagram and WhatsApp who were also the early movers in this segment. However, the made in India social media apps such as Roposo, Trell, Chingaari, MX TakaTak, Moj most of whom have come up in the last 1- 2 years are also looking to enter the social commerce space to grab the opportunity," Pakhi Saxena, practice head, retail and consumer packaged goods, Wazir Advisors.

Social commerce has emerged in markets such as China and India built as a parallel shopping platform to large e-commerce marketplaces. Social commerce, is effectively is a subset of e-commerce that utilizes social networks, peer-to-peer communication and online media that supports social interaction to assist online buying and selling of products and service

Various models have emerged too including a reseller model, group buying and video commerce.

These channels largely target shoppers in India’s smaller cities and deal with mostly non-branded goods such as apparel, beauty and personal care, footwear, electronics and home utilities, according to the report.

However, the pandemic has helped accelerate the move to social commerce channels, it said.

While the e-commerce sector reported 45% growth in 2020, currently only one out of seven  people who have access to internet, shop online, according to the report.

That’s because—large marketplaces are not accessible to shoppers in India’s smallest towns and cities. Additionally, new-age digital first brands are cropping up across categories prompting them to use non-traditional channels such as Facebook and Instagram to market.

This, said, the report is driving the growth of social commerce in India.

Meanwhile, the sector has seen investor interest. Most platforms including Meesho, Trell, DealShare, GlowRoad have raised funds in the last 12 months. Meesho—with 75 million total app downloads—raised $570 million in September valuing the re-selling platform at $4.9 billion.

But the shopping routine is also riddled with challenges. For one, typical order size on these platforms is quite low making it hard for large e-commerce marketplaces to participate in the market. The report pegged the average order value of such transactions to be under 250. Additionally, existing players are finding it hard to retain resellers and influencers.

The report estimates that 55% of the customer base belong to tier II and III towns and contribute nearly 80% of the gross merchandise value. Meanwhile—the report said that large incumbent players such as like Amazon, Flipkart been unable to serve the needs of the customers in tier II and IV markets in a more focussed way.

“While these companies have established reach across most of the pin codes in India, but owing to their high-cost structures and high customer acquisition costs are not able to serve the bigger chunk of customers in these regions who are looking to buy low value unbranded items. However, these companies are now taking various steps to reach out to these set of customers through various initiatives," Saxena said.

Saxena said given the success of social commerce in China and the likeness of social structures in China and India, India’s social-commerce industry should be able to repeat the success even while the traditional e-commerce business grows in scale.

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