The other startups in this space include the SZS Tech-owned Simsim, which raised $8 million a few months ago from a clutch of investors like Accel Partners. Mall91, another social commerce player, has received series A funding from a group led by Gojek Capital, and Dealshare has raised $11 million from companies
like Matrix Partners. Bengaluru-based WMall and Pesopie have also got funding in this space.
The social commerce sites are mostly targeted at Tier 2 and Tier 3 cities. For the uninitiated, in social commerce, users leverage their personal contacts to generate more customers, and this helps the digital company to reduce the cost of marketing and acquisition of new users. People who know the customer send product suggestions based on their preferences. Most of the products on offer are un-branded lifestyle products — fashion, accessories and grooming — inspired by television and movies. The close interaction between buyers and sellers creates trust as well as loyalty.
For instance, when influencers demonstrate the use of new products, potential customers can have live chats with them and ask questions about fit and style. The live chats generate trust and make the shopping experience much more entertaining than vanilla e-commerce transactions.
A report by BofA
Global Research points out that these startups want to cater to India’s non-English speaking audience, who number around 1 billion. This huge group of people have a lower per capita income than the high-end and middle-income group. Hence, companies
catering to this segment need to have different products and marketing strategies.
says that the pyramid consists of three layers: High-income users, who account for 100 million people (25 million of the working population); the social commerce players cater to the next 100 million (25 million of the workforce). They understand English, but are not too comfortable with it. Most have smartphones and use social media, but they do not shop online much. Then there is the low income group, where the ad-led model is the primary way in which tech companies are trying to bring them into the subscriber base.
Despite all the hoopla about e-commerce in India, the country has around 120 million e-commerce shoppers, of which only half are active users. Yet there are over 300 million social media users and as much as 1.2 billion mobile users. Of them, about 500 million are on smart phones. WhatsApp, one of the most popular messaging sites, has over 400 million customers.
The social and live commerce players are attempting to tap this potentially large market and bridge the relatively low usage of e-commerce in Tier 2 and Tier 3 cities.