Why Social Commerce will be the next big thing to happen to Indian Retail ?

Your kid demands a new toy during bed time story session. You open Amazon App and show him the options that you think would be best for his age, taste and within the budget. Kid finally selects one and you order it. The product is delivered to your kid the next day. Kid is happy and gives you endless free hugs. 

Now, in above scenario replace your kid with friend or a colleague. You do the same what you did for your kid that is help your friend order a product that best serves his or her needs, lifestyle and budget. Product is delivered directly to your friend and you are paid commission in cash for bringing in that sale. Welcome to the world of social commerce. You are a reseller, your kid or your friend is the end customer. The website you order from is the Social Commerce Platform.   

Meesho, GlowRoad, Shop101 and  Ezmall are leading the Social commerce revolution in India. These social start-ups are riding on the user bases of social media platforms like Whatsapp, FB, Instagram to build e-commerce solutions for Post-Jio India that is the 200-300 million new internet users who joined the bandwagon only after Jio.

Who are these Online resellers and where are they?

The ‘Online Reseller’ is a relatively new term and can be described as a group of sellers comprising of Housewives, ex-SMEs, college students, unemployed males etc. More than 60% of resellers on SCom platforms are females. As per a recent report released by Bengaluru-based consulting firm Zinnov, 2 Mn women homemakers across the country registered $9 Bn gross sales by selling apparels and lifestyle products. This number of online housewife resellers will increase from the current 2 Mn to 21-23 Mn by 2022 with gross sale of $48 Bn-$60 Bn by 2022 as per the report.

How S-commerce is different from e-com?

1. Social commerce start-ups are differentiated from the big e-commerce companies like Flipkart and Amazon in multiple ways apart from obvious differences in how that generate demand. SCom platforms offer a different range of products which are largely unbranded and cheaper. AOV in case of Amazon - Flipkart is Rs 1300-1400 while in case of SCom its Rs 300-400.
2. SCom offers a different kind of customer experience that is more friendly, trustworthy and personalised as compared to regular big box ecommerce.
3. Social commerce start-ups have lower customer acquisition costs as compared to regular ecom companies because they tap into existing channels like WhatsApp or Facebook to reach customers.

Why India needs S-commerce?

1. Reach - 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. SCom has potential to take the number of online buyers to 300 M+.
2. Language Problem - Mother tongue >> English - majority of Post-Jio customers either don't know English or are not comfortable with English. SCom doesn't have any language barrier as such resellers explain everything in the native language of the customer. And customer doesn't need to take any action on the platform himself.
3. DIY Vs DIFM - India culturally is a "Do It For Me" or DIFM country as against DIY culture of west. People expect assistance especially in situations where money is involved. SCom not only offers DIFM experience but it offers it in comforts of your home and assistance is provided by none other than your own trusted friend or family member.
4. Meet >> Call >> Email -Indians need to meet to conclude a deal or sale especially in India 2. Mainly because they have all the time in the world. And now after years of repeating this behaviour it has become part of their personality that is meet me if you want my business.
5. Inertia- Several people, particularly in small towns, are uncomfortable in buying online. They will simply not trust ecommerce come what may. 
6. Awareness or Demand generation - is very important for Indian market as people are slow adopters of new concepts, technology and products. But in case of SCom reseller plays a vital role in educating buyers about new products like for example smartwatch.

Problems with S-Commerce?

1. Army of Resellers - SCom to be successful would need millions of resellers which means piles of cash to onboard and train resellers. Soon you will see funded SCom platforms fighting amongst themselves to onboard resellers.
2. Cost of delivery is high as volumes are still low. It will take some time before the economies of scale starts kicking in. Till that happens margins will remain negative which means burn.
3. Supply -we don’t have excess manufacturing capacity like China where factories produce a lot of non-branded stuff and the economies of scale can be easily reached. Due to supply limitations majority of the products sold on SCom platforms are manufactured in and imported from China. Import means hassle and delays in delivery.
4. Marketing Startegy -Aggressive marketing is not the right way because if everybody becomes reseller who will be the end customer. So one has to have a very subtle and below the radar marketing strategy for on-boarding resellers which is tricky.

Having said this Social Commerce is the next big revolution that organised retail of this country would experience. The phenomenal growth Social Commerce has already seen only shows that it is well-poised to serve the next 500 million online shoppers in the country.