How is the social commerce scene in India slated to change with Flipkart’s foray

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Updated: Aug 03, 2020 3:02 PM

While social commerce is attracting interest, the challenge will be to extract value from the transactions on the platform, experts say.While social commerce is attracting interest, the challenge will be to extract value from the transactions on the platform, experts say.

Social commerce is once again the flavour of the season. Flipkart has joined the likes of Meesho, Dealshare, Shop 101, BulBul and SimSim, by introducing social commerce on its value platform 2GUD. Earlier this year, Paytm started allowing merchants to not just sell their own products, but also become resellers on the platform through a zero-investment model.

Then there’s Shoploop, Google’s video shopping platform that combines product discovery, comparison and purchase, which is yet to launch in India. 2GUD and Shoploop feature short videos, 90-second-long at most, and let users shop for the products featured in the videos.

While social commerce is attracting interest, the challenge will be to extract value from the transactions on the platform, experts say.

Appealing to the value conscious

Social commerce leverages the power of influencers to impress users to buy a product. Companies venturing into social commerce are not looking at the urban, metro population as their main target audience. Instead, they want to attract first-time internet users. “The next 200 million first-time e-commerce shoppers will be from Bharat,” notes Chanakya Gupta, head, 2GUD, Flipkart. 2GUD, he says, “caters to their urban aspirations with value-driven offerings.”

A Meesho spokesperson says that most transacting resellers on the platform are from the lower middle-class, with nearly 70% from tier II cities and beyond. Flipkart’s 2GUD, which was initially launched as a destination for refurbished goods in 2018, gets a large share of its transactions from the non-metros.

Big brands, however, stay away from social commerce in India, with unbranded products ruling the scene. Most buyers on these platforms are value conscious, and tend to look for low-cost products. On Meesho, users mostly seek products in categories that have more standardisation, such as home/ kitchen utility products, and appliances. Further, “they typically seek high value for money products,” says the spokesperson.

In contrast, social commerce in countries like China can rake in millions of dollars in sales value. Take the case of China’s popular livestreamer Huang Wei (also known as Viya), who sold a rocket launch for around 40 million yuan ($5.6 million) in April.

2GUD hopes that it will open up a new opportunity for brands to showcase their products on an engaging medium, and through individuals who understand the target audience’s requirements.

Slow adoption

Why hasn’t social commerce taken off in India yet? Rahul Vengalil, chief business officer, Isobar Consulting, says social commerce is not on the radar of many brands, “as we are still looking at digital from the advertising lens only”.

Brands, he says, need to concentrate efforts and budgets on content creation for social commerce to be seamless and valuable. India’s diversity, Vengalil adds, is an important cog in the wheel. “Targeting a wide range of consumers with the same content will not be effective. Content needs to be culturally relevant for a greater chance of conversion,” he adds.

Neel Gogia, co-founder, IPLIX Media, an influencer marketing agency, says that the monetary incentive for influencers to create content around products for social commerce is not encouraging yet. “E-commerce brands leverage influencers and celebrities to promote their platforms and sales events, but they are not at the core of promoting products,” he adds.

Hence, despite the entry of players like Flipkart, Ankur Pahwa, partner and national leader, e-commerce and consumer internet sector, EY, believes that “the biggest challenge will continue to be monetisation of the user base, where the interaction may be high but transactions are low.”

2GUD has an advantage with the payment integration through its mother brand Flipkart and PhonePe, say experts. It is expected that Jio Platforms, which has 388 million users, its e-commerce play Jio Mart and e-wallet Jio Money could give a much-needed push to this market in India.

Another hurdle limiting the growth of social commerce is counterfeit and low-quality products — not surprising that this category of e-commerce has a very high return rate. Gupta says that 2GUD conducts “a rigorous 47-step quality check” to ensure full functionality, offers an additional three to 12 months warranty for its refurbished portfolio, and each product is certified and graded by experts.

Meesho, meanwhile, has built systems that create feedback loops on supplier and product quality, and instituted policies that promote only genuine suppliers, while penalising the others.

Read Also: Bata India bets on online channels

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