Before the Covid-19 pandemic, I came across a study which estimated that an average person would spend five years of his life on social media which is around 1,825 days or 43,800 hours. The pandemic and its aftermath further increased the time spending on social media. People are spending most of their time on the social platforms like Facebook, WhattsApp, YouTube, Instagram and Twitter. This has become an opportunity for the social media organisations which successfully added the commerce into it; and social commerce is going to rule the businesses in future.
Today almost everyone has a social media account. While announcing the new social media rules in February, the Indian Government revealed the usage of social media apps in the country which speaks volumes about their popularity and penetration. WhatsApp topped the charts having over 53 crore users, YouTube in the second spot which has over 44.8 crore, followed by Facebook with 41 crore and Instagram with 21 crore users.
Along with the growth in the number of social media users, social commerce is also poised to a spectacular growth in the near future.When we are browsing through Facebook, many advertisements are found and they pop up in the right-side corner. Some overlook it; some click it to find out the details. Different brands are displaying their products nowadays and finding the social media platform providing them customers with personalised experiences. If you wonder why there are so many advertisements, the answer is that the platform we are using is free and we are the products for the organisation. It is a public company and has to generate income for its shareholders and the income comes to it from advertisements.
The social media giant which also operates Instagram, Messenger and WhattsApp ruling the social commerce sector is introducing new features from time to time which offer new ways of consumer interface with sellers. The company is now able to count more than one billion monthly active users who browse its marketplace service where users can buy and sell products and services. The company reported revenue of $26.17 billion for the last quarter, which was up 48% compared with last year. Its net income grew from $4.9 billion to $9.5 billion a year prior to witnessing a growth of 94% and 12% increase in the number of advertisements delivered.
There were 448 million social media users in India in the beginning of 2021 which increased by 78 million in 2020. The number is equivalent to 32.3% of the total population of the country.
According to the Bain and Company, a global consultancy firm, the next biggest driver for Indian ecommerce, will be social commerce. Social commerce in India in terms of Gross Merchandise Value (GMV) was estimated by the consultancy firm at $2 billion in 2020 which is projected to reach $16-20 billion by 2025 and $60-70 billion by 2030.
Social commerce is the use of social network platforms in the sphere of ecommerce. The social media interaction and the views of the users are used to support the buying and selling of products and services. Social commerce is the buying and selling of goods and services within a social media platform. Brands are not only promoting their products on these platforms but also selling their products and services with an added value to the shopping experience of the customer.
Social content has become the easiest and effective way of connecting a firm and its followers. The comments and opinions of the existing customers are becoming the powerful marketing weapons of the dealers.
The User Generated Content (UGC) successfully establishes an emotional connection between the buyer and the seller. All these things are compelling today’s ecommerce firms to go for social commerce to strengthen their customer base. The Wallmart-owned ecommerce giant Flipkart recently introduced a Shopsy app which enables entrepreneurs to start their online businesses without investment. They simply have to register on the app with their phone numbers which gives them access to around fifteen crore products of multiple categories.
They can share some of the selected products with potential customers in their local network though their WhattsApp or Facebook. Later on, they can order the products on behalf of their friends and earn commission. At present, Flipkart’s 70% of customers are from tiers 2 and 3 towns. With the introduction of Shopsy app, it is expecting to reach 90%. This is going to generate a new breed of influencers and influencer-based marketing in future on the social media network.
Last five years witnessed entry of many social commerce start-ups into the Indian social commerce arena like Meesho, DealShare, Bulbul, GlowRoad, Mall91, Simsim, Trell, Shop101, etc., and developed their customer bases very fast and become well-established. They attracted investments from top VCs such as Accel Partners, Naspers, CDH China, Go-Ventures etc., which helped for their expansion.
When Bengaluru-based Meesho tried to attract investments in 2015, many turned a deaf ear to their request. In 2021, the company has raised $300 million led by SoftBank Vision Fund2.
DealShare attracted $144 million from New York-based venture fund Tiger Global. Inmobi-owned lockscreen content platform Glance acquired Mumbai-based social commerce start up Shop101 and YouTube acquired Simsim. According to the data from Venture Intelligence, social sector start-ups attracted venture capital to the tune of $554 million as of July 16, 2021 which is seven times higher than last year’s. The future ecommerce will be greatly influenced by social commerce and it will be an all new experience for the customers. The traditional ecommerce is going to be supported by social commerce, which gives a new experience and satisfaction to the customers. Of course, with the more involvement of social media, there will be chances of biased and one-sided opinions and recommendations which may ultimately affect the customer. New modalities are to be found out to make the things foolproof. Anyhow, social commerce is going to be a sunshine sector in the future, no doubt about it.
(Dr Biswal is Head of Commerce Department, Nowrangpur College, Nabarangpur, Odisha, 764063. Mob: 9437125286. bhaskarnathbiswal@gmail.com)