Inflation has had a severe impact on consumer spending in 2022. With the fears of a potential recession in 2023, PayNXT360 expects a further decline in discretionary spending over the next 12 months. Consequently, more and more e-commerce marketplaces are projected to target value-conscious customers to drive their revenue growth from the short to medium-term perspective. Notably, the business model has brought widespread success for some of the e-commerce marketplaces around the world. For instance,
The majority of the products, available on the platform, are priced below INR 300 on Shopsy. Some of the product categories where consumers can shop for products include fashion, home décor, and beauty. The strategy of offering low-priced items has allowed the firm to gain widespread traction among consumers from Tier II, III, and IV cities in India. According to Shopsy, more than 68% of its total shoppers come from these cities.
Apart from growing traction among value-conscious consumers, the platform had also garnered seller attention. In 2022, the platform reported a growth of nearly 10 times in its number of sellers, compared to the year before. With its expansive range of value-based products, coupled with a zero-commission model that is attracting more sellers, the firm is seeking to drive the next growth wave in the Indian e-commerce sector. This will also enable Shopsy to accelerate the revenue growth of the parent firm.
With both Meesho and Shopsy attaining high growth in customer acquisition, sales, and revenue, more and more e-commerce marketplaces are expected to target value-conscious consumers in India in 2023. With inflation eating into consumer spending, the strategy can enable e-commerce marketplaces to drive their gross merchandise value from the short to medium-term perspective.
Alongside India, the strategy of offering low-priced items to attract more shoppers seems to be working in the United States as well. Temu, the Chinese e-commerce platform that launched in the North American market in September 2022, had also attained widespread success through the implementation of the same strategy in the United States.
Through the strong supply chain network of its parent company, Pinduoduo, the firm is able to offer products at discounted prices in the North American market. To further accelerate its growth in the region, the firm is also making a significant investment in marketing. Furthermore, Temu has also integrated a gamification element to drive the popularity of its shopping platform among consumers in the United States.
Through its aggressive advertising, discounted product offerings, and addictive referral campaigns, PayNXT360 expects Temu to keep garnering major market share in the United States over the next 12 months. Going forward, in 2023, Temu is expected to further expand its footprint in the North American market, with a potential launch in Canada over the next few months.
The success of Shopsy and Meesho in India and Temu in the United States is a clear indication that consumers are turning to providers that are offering more value per dollar spent on the product. With economic headwinds, rising interest rates, and the soaring cost of living, more and more consumers are projected to become cost-conscious from the short to medium-term perspective. Consequently, as e-commerce marketplaces seek to drive their revenue and sales growth, the trend of offering discounted products is expected to grow significantly around the world.
The strategy is not just a major customer acquisition tool, but it has also turned out to be a revenue and sales growth driver for firms. This is evident with the success of Shopsy and Temu in their respective markets.
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