Trivedi’s experience captures the entire gamut of social commerce—commerce and selling facilitated by social media—where recommendations are made on the basis of a user’s likes and preferences. This ease of shopping, however, also comes with inherent danger, like in Trivedi’s case.
Enter secure platforms that help offline businesses go online, use referral systems to buy, sell or promote products and services, all the while capitalising on people’s usage of social media.
Unlike random pages on social media apps like Instagram, these platforms keep all the stakeholders’ interests in mind while aiming to increase the number of transactions. And unlike Facebook Marketplace, social commerce platforms also take on the responsibility to handle logistics, returns, payments—generally COD—and any disputes.
The medium generally used to distribute product information is a social media platforms like WhatsApp, Instagram and Facebook, and the product is sold to the end customer by a friend, family or relative. Social commerce platforms provide ecommerce functions, but use social media to help them through it.
GlowRoad, along with platforms like Meesho and Shop101, has a B2B2C model, where the reseller sees a product on the app, and sends product images and description to potential buyers via social media. Once the end-customer chooses a product of their liking, the reseller can add their margin, add the buyer’s address and after choosing a payment option, order the product. While the seller gets the price of his product, the reseller gets a cut, the customer gets the product delivered, and the platforms charge a small margin for themselves.
As a safeguard, social commerce platforms pay sellers after a specified period to reduce discrepancies and ensure customer satisfaction.
While reseller platforms like Meesho and Shop101 help create entrepreneurs and homepreneurs, others like CoutLoot help offline sellers go online with ease and without making any investment. For small businesses, selling via traditional ecommerce is a task that involves several processes and a lot of paperwork. Whereas on CoutLoot—an O2O social commerce platform—there is no need for lengthy paperwork, says Jasmeet Thind, co-founder. “To take your store online, all you need is your phone and internet,” he explains.
Mall91, another vernacular, local language-focussed platform that sells products through live and TV shopping apart from direct selling, also partners with influencers who try the products in front of the camera after which people can choose to buy them. The platform incorporates social media on a referral basis, where getting a customer to purchase from the platform gets the referrer commission. This commission is not a margin, as on the reseller platforms, but a proportion of the platform’s own commission.
BulBul and simsim are other live and influence-marketing social commerce platforms that work on a similar model.
Push vs pullWhile ecommerce platforms are built for the topmost population of metro cities, social commerce platforms are designed to attract people from smaller cities, towns and villages. The applications are available in various vernacular and regional languages and the interface is simpler.
People go on ecommerce platforms knowing what they want to purchase. They search for a product, compare prices across buyers and purchase it. This marketing strategy is called pull marketing, where the company spends money to pull customers on its platform with the idea that they will purchase. Social commerce uses a push marketing strategy, where the product is pushed on people’s phones using social media, points out Nitin Gupta, founder and CEO of Mall91. Thus, the customer acquisition cost for social commerce platforms is lower. “We don’t spend more than ₹20-25 to acquire a customer,” he says.
While purchasing on an ecommerce platform is a well-planned buying decision, customers on social marketing platforms make impulsive buys. Moreover, ecommerce platforms show thousands of results in a product search whereas on social commerce, someone who knows your choice sends you a few personalised recommendations of a product based on your likes and preferences. “Someone keeps window shopping for you, and sends you products once every few days, personalised for you. If you then think you want to buy it, you buy it,” says Sinha of GlowRoad, which grew to $20 million in Gross Merchandise Value (GMV) when it was launched in 2017, and recently crossed $100 million.[qt]The entry point for users is an aspirational catalogue. This includes things they are inspired to buy from TV serials and movies.Nitin Gupta, founder and CEO, Mall91[/qt]
Since social commerce is geared at smaller cities and towns and helps offline businesses move online, the products on the platforms are often non-branded and cheaper. “The entry point for users is an aspirational catalogue. This includes the things they see and are inspired to buy from TV serials and movies but are sometimes not available in their town,” says Gupta. The categories of items available include fashion and apparel, FMCG goods, beauty and grooming products, electronics, wearables and daily need products among other things.
The way aheadSocial commerce platforms are successful because of their inherent trust factor [as people only buy from a known connection] as well as the use of platforms like WhatsApp, Facebook and Instagram that people are already comfortable with. Besides, they enable conversation in local languages, use chat features before check-out and provide users a video-based product experience. “One of the biggest challenges we faced was to bring an experience to users in their own language to make them very comfortable,” says Vidit Aatrey, CEO, Meesho.
Thind adds, “Because the seller and the buyer chat before a deal, the seller can give more information and the buyer can bargain. The auto translate feature in apps translates the language to your local language which leads to the parties trusting each other.”
Social commerce is not without its challenges. Sometimes, when buyers know the price and details of a product, they tend to buy it directly from the website, as in the case of traditional ecommerce. Hence, social commerce platforms have ensured that their name does not appear anywhere in the transaction process. “We need to protect the interest of our resellers... GlowRoad’s name is not revealed to the end customer in any of the processes, even during delivery. If it would, the reseller would get killed in between,” Sinha says.
Since the spending capacity of users from smaller towns and cities is low, the ticket size coming from these places is also low. Besides, people often choose the COD option, putting the responsibility of handling and dispersing cash in the hands of the platform. Shipping to and from smaller cities and towns also becomes a challenge. To deliver products with low monetary value only adds to the operational burdens of these platforms.
“I think social commerce will become the largest ecommerce for categories such as fashion, accessories cosmetics and more because 93 percent of total commerce in these categories is unbranded,” says Aatrey. Social commerce remains among the only channels that work with unbranded products, giving them a first-mover advantage in this largely untapped product category in India. “This has just started in India. So I think it’s going to get bigger and more innovative,” Sinha adds.
And if China is anything to go by, it might just produce the next class of unicorns in India. At present, China sees a 63.2 percent year-on-year growth in social commerce platforms. The platform Pinduoduo has been the fastest growing social commerce app in China’s history, becoming the country’s third largest app in just three years since it started. While Pinduoduo’s average order value is $6, as compared to $30 on competitors Taobao and Tmall, and $60 on JD.com, the platform, after its IPO on Nasdaq, was valued at $60 billion. Gupta says, “The behaviours [in India and China] are different but the markets are similar. The next 3, 4, 5 years, we can see exponential growth.”
First Published: Dec 10, 2019, 09:18
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