Social commerce has emerged as a new way to reach millions of online shoppers from smaller cities in India

Social commerce has emerged as a new way to reach millions of online shoppers from smaller cities in India

Social commerce has emerged as a new way to reach millions of online shoppers from smaller cities in India

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E-commerce has been rapidly growing in India, with more and more consumers flocking to online shopping channels for their daily needs. However, while larger cities in the country have been the main drivers of e-commerce growth, the potential for expansion in smaller cities and towns is now being recognized. Over the next three to four years, consumers in Tier III cities and beyond are expected to contribute significantly to the total incremental growth of the e-commerce market. This presents a significant opportunity for e-commerce companies looking to expand their customer base in India.

One way that firms are looking to tap into this potential is through social commerce. In India, social media platforms are becoming an increasingly popular way for consumers to discover new products and make purchases. This presents a huge opportunity for e-commerce companies to reach new customers in smaller cities and towns through social media platforms. By using social commerce, e-commerce companies can create a more seamless shopping experience for consumers, who can discover products and make purchases without having to leave their social media app.

In addition to the convenience factor, social commerce also offers a way for e-commerce firms to build trust with consumers in smaller cities and towns. Meesho, now one of the leading players in the segment, has been able to build trust with its shoppers through the social commerce business model. Over the years, lack of trust has been a critical factor affecting e-commerce adoption in India. By allowing consumers to make purchases through social media platforms that they are already familiar with and trust, e-commerce platforms can help to overcome this barrier.

With the potential to achieve higher consumer traction and revenue growth, many e-commerce firms in India are investing in social commerce and developing new strategies to reach consumers in smaller cities and towns, and the trend is projected to further continue in 2023. To promote products and services, firms are also partnering with social media influencers. Over the years, social media influencers have become a popular way for brands to reach younger audiences in India, with many consumers turning to influencers for product recommendations and reviews. By partnering with influencers, e-commerce firms can tap into this trend and reach new audiences in smaller cities and towns in 2023.

The influencer-focused social commerce vertical is becoming increasingly competitive in 2023. This is expected to result in a growing number of mergers and acquisition deals in India over the next 12 months.

  • In March 2023, The Good Creator Co., the influencer-focused vertical operated by the Good Glamm Group, entered into an acquisition deal with Bulbul, the social commerce startup. The acquisition of Bulbul will bolster the Good Glamm Group’s creator strategy and will also enable the firm to access consumers from Tier II and III cities of India.

The Good Glamm Group has continued with its acquisition strategy in 2023. Including Bulbul, the firm had acquired eight startups since 2022. While the social commerce sector offers a lucrative growth opportunity and more such acquisition deals are expected to take place in 2023, mounting losses and increased competition has also resulted in many players shutting down their social commerce business vertical.

  • In March 2023, YouTube, owned by Google, announced that the firm is shutting down its live social commerce app Simsim, which it acquired for US$70 million. The development comes two years after the acquisition of Simsim. Notably, growing losses posted by the firm have triggered the downfall of the platform.

Even though YouTube is shutting down Simsim, it announced that it will continue to bet on the social commerce vertical and will work with creators to introduce new monetization opportunities. Alongside YouTube, Amazon has also boosted its presence in the Indian social commerce sector in 2022. The e-commerce giant launched its live commerce service in India in October 2022.

These trends indicate that global investment in the Indian social commerce market is projected to grow significantly over the next 12 months, as players look to capitalize on the next growth wave in the Indian e-commerce industry.

To know more and gain deeper understanding of the social commerce market in India, click here.

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