More than ever Indians are taking to the internet now and social commerce is slated to be the strongest driver of growth for the ecommerce segment. Characterized by usage of social networks, ratings, online communities, social advertising, shares, stores within the social networking website, video interactions, influencer marketing etc, social commerce makes shopping online a more collaborative experience.

Although the Indian social commerce market is currently in its nascent stages at $1.5 billion to $2 billion GMV, excluding a large informal market, with most transactions driven through social platforms, the industry has a strong potential to become a $16 billion to $20 billion opportunity by 2025 said the ‘Unlocking the Future of Commerce’ report by Bain and Sequoia. With startups such as Meesho, Foxy, BulBul, DealShare, Mall91 and SimSim among others paving the way the industry holds the potential to reach $60 billion to $70 billion by 2030.

The crucial factor driving this growth is the trust factor that social commerce brings to the table as compared to e-commerce. The report stated that ‘lack of trust’ remains the biggest inhibitor of online commerce in India. While as many as 572 million Indians are currently connected to the Internet (the second-highest number of connected users globally), only about 100 million of them purchase products online today. This accounts for a measly 8 percent of Indians shopping online with an average spend of $286 per year which is significantly lower than other markets. There certainly exists a huge untapped opportunity.

By the virtue of making shopping collaborative and involving familiar faces in the purchase process social commerce holds the key to this untapped market opportunity. These platform (social and video) have more universal usage, with both online transactors and non-transactors spending around two hours per day on social media, chat and video content. The popularity of these platforms creates opportunities to enable and support social commerce said the report.
In addition to building trust, social commerce meets growing consumer demand for:
• A desire for greater product variety and customization
• A feeling of community connection and trust
• Convenience
• Bargaining experience similar to offline purchases
• A fun and engaging shopping experience
While the e-commerce space is dominated by big ticket firms and corporates, the advent of social commerce will usher is an era of democratising within the Indian e-commerce sector. This will eventually pave the way for a more distributed model that’s built on community, connection and trust. According to the report social commerce will create an opportunity to empower over 40 million small businesses and entrepreneurs to leapfrog into online commerce, expanding their reach and supplementing their existing income from other channels.

For most sellers social commerce represents the ability to create incremental value over and above their existing business. However, because the process of initiating contact with the customer, negotiating and then closing a sale often spans multiple platforms, a more streamlined order-management process and better customer analytics are the biggest asks from sellers said the report.

Over 85 percent of sellers leveraging social commerce currently are small, offline-oriented retailers who have found that social channels opens new avenues for growth. Unstructured, long-tail categories make up the bulk of the social commerce landscape today. Fashion is the most popular social category, followed by Beauty & Personal Care, then Food and Grocery. Traditional e-commerce-centric categories like Electronics are typically either non-branded or are products pushed by influencers.

Startup founders stand to win big by leveraging these new social-led models. They must focus on developing new tools/applications for sellers, such as chatbots, digital storefronts and order management tools. Startups must also reimaging high value categories by building social-first models where a community-based product could lower the trust deficit. Lastly, they must build solutions for enablers such as logistics and payments for the social-commerce ecosystem suggested the report.

The next ten years will be witness to India’s social commerce sector doubling in size as compared to today’s e-commerce market. While traditional e-commerce will continue to grow, these social-led models will redefine the landscape over the next five to ten years.