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Will Social Commerce Pay Off in India?

With young Indians hooked on short-form video content, global fashion and beauty brands are investing in social commerce and live shopping trials to gain an edge in the rapidly growing market.
An influencer holds up a skin care product in front of a ring light and mobile phone.
With young Indians hooked on short-form video content, global fashion and beauty brands are investing in social commerce and live shopping trials to gain an edge in the rapidly growing market. (Shutterstock)
By
  • Arnika Thakur
BoF PROFESSIONAL

Key insights

  • E-commerce and social media companies are investing billions in India, but experts say they need to offer brand partners better content marketing solutions.
  • India’s dynamic tech ecosystem includes several homegrown social media, live commerce and video platforms, some of which are gaining popularity.
  • Fashion and beauty brands trialling social commerce strategies are reporting encouraging results through micro influencers and big celebrities alike.

When it comes to social commerce, some markets just seem to be more of a natural fit than others.

In India, during the promotional period playfully known at Myntra as its ‘End of Reason Sale’, the online fashion retailer featured a livestream session with Bollywood actor Ayushmann Khurrana on its live shopping channel for Swedish watch brand Daniel Wellington. Sporting an all-black outfit with sneakers, the award-winning actor famous for his portrayal of ordinary men battling social norms, sipped on a cup of coffee while talking with a moderator about how he styles his watches.

One of the first things live audience members wanted to know was the extent of the discounts available during the June sale. “Mira and Harsh,” Khurrana said, addressing two of the viewers, “you have [both] asked for a discount as soon as you got here, which is very Indian [of you]. So proud,” he quipped. In the next 28 minutes, Khurrana talked about everything from sturdy rubber watch straps that suit India’s monsoon weather to his favourite rose-gold timepiece that would complement a Diwali outfit. He even sang a song from one of his films on request.

The purchase journey of the session was relatively smooth. An in-app add-to-cart button allowed viewers to shop during the livestream and viewers on Instagram were sent a link to it when they typed “shop” in the comments. According to a spokesperson from Daniel Wellington, a range of women’s watches were sold during the stream.

Pragya Priyali, Myntra’s director of social commerce, says the live commerce session with Khurrana — who is an ambassador for the brand — was a big marketing hit, bringing in 25,000 “customer engagements” and more time spent on the app. “This is a great mixture of branding as well as commerce. And it can become a feeder depending on how brands choose to use it,” she said.

Increasingly Unique Ecosystem

If the online end of season sales are any indication, young Indians are now engaging with and buying fashion and beauty products on live video sessions with local influencers on some of the country’s biggest e-commerce platforms. The question, however, is: how many?

E-commerce fundamentally needs to be reimagined for the next wave of growth [and that] baseline shift in Indian e-commerce will come through content-enabled commerce.

Fashion retailer Mango said it reached 1.3 million prospective customers on Myntra Live during the recent sale period. Puma, which commands more than 137,000 followers on Myntra’s shoppable content platform, and traditional Indian fashion brand Libas Studio, also noted engagement rates they deemed to be strong.

Walmart-owned Flipkart and Myntra, Mohalla Tech-owned local language social media network ShareChat and short-video platform Moj, are some of the players experimenting with social, live, and video commerce. Flipkart says it saw close to 100 hours of engagement via live and video commerce during its end of season sale in June, with the highest engagement for fashion categories including childrenswear and shoes.

“E-commerce fundamentally needs to be reimagined for the next wave of growth to come in,” said Amit Zunjarwad, chief product officer at ShareChat and Moj. “[And that] growth or baseline shift in Indian e-commerce will come through content-enabled commerce.”

In leading markets like China, major e-commerce players including JD.com, Taobao and Pinduoduo are already replacing text and images with short-format videos for product information on their apps. Several platforms in India are enthusiastically following suit, but it’s not a rosy picture for all local social commerce players.

According to local media reports, there is trouble afoot at buzzy startup Trell, which last year attracted investors including H&M Group in a series B funding round. Investigations are underway for financial irregularities at the company amid allegations of employees and content creators being either laid off or quitting after not receiving payment for work.

Despite the challenges facing some players, online video consumption, boosted by prolonged stay-at-home periods, is booming in India. Bain and Company predicts that 600-650 million Indians — or three in four internet users — will consume short-form videos by 2025, with active users spending about 55-60 minutes a day on them. Deloitte predicts the number of Indian smartphone users is expected to cross a billion in the next four years, from the current 750 million.

This is an exciting proposition for brands, e-commerce platforms, and social media companies competing to capture new shoppers. Many are betting on local influencer-led social, video, and live commerce to get more people to shop online.

“Live commerce, the use of micro and nano influencers to drive sales of niche products to a relevant audience base, smart segmentation of WhatsApp channels, and scaling platforms like Pinterest are some of the trends that will spur the growth of social commerce in the country,” says Gitanjali Saxena, business head of global luxury at Indian e-commerce platform Tata Cliq Luxury, which sells brands such as Versace, Coach and Paul Smith.

The kind of results that live and video commerce seem to offer is compelling enough for some brands to invest in a big way.

For example, Indian direct-to-consumer beauty and wellness brand Wow Skin Science ran its biggest summer campaigns on Moj which garnered over 500 million views and 100 million engagements. The brand, which is active on several Indian social media and e-commerce platforms like AI-driven lock-screen platform Glance, Facebook-backed e-commerce platform Meesho, Myntra Studio’s MLive, and Flipkart Live, says its viewer numbers range from a few hundred to tens of thousands at any given point during its sessions.

Harsh Parekh, general marketing manager of Wow Skin Science, described the response as “extremely encouraging.” Together, social and live commerce have been “emerging as a new channel for both content and reaching out to high-intent consumers with focused sales-led communication,” he told BoF.

Beauty brand Faces Canada, which is collaborating with YouTube, Instagram, Moj, and Facebook to boost social commerce, plans to integrate live commerce on its own website as well. According to chief executive Kunal Gupta, the intention is to educate consumers about new kinds of products, using the full customer journey as it progresses from discovery to transaction. Currently, about 10-20 percent of the brand’s digital business comes through social commerce with further opportunity to scale, he added.

Though global platforms like Facebook, Youtube and Instagram remain incredibly popular, India’s dynamic tech ecosystem includes a diverse range of local social media and video players such as Koo, Chingari, Mitron and Roposo.

Tapping the Youth Market

With the largest youth population in the world, India is a potentially attractive market for global companies targeting a younger demographic. Yet the e-commerce experience hasn’t changed much for users in the last decade or so even though Amazon, Walmart, and Reliance Industries have pumped billions into Indian e-commerce. Amazon alone has reportedly invested more than $6.5 billion in the country.

Executives believe that brands and e-commerce platforms both need to recalibrate their content marketing strategies to newer formats. After all, according to Google’s own data, first reported by TechCrunch, nearly 40 percent of Gen-Z people use TikTok or Instagram for some searches instead of Google. ShareChat, Shopsy, and Myntra all contend that the most traction on social, live, and video commerce is coming from a younger audience.

Some major players do already seem to recognise the opportunity in reaching younger consumers through live and video. Amazon is bolstering its social commerce presence in India having earlier this year acquired social commerce start-up Glowroad, which has a network of resellers who sell products directly to consumers in their community using social networks.

Saurabh Srivastava, director and head of Amazon Fashion India, says that as the social commerce space evolves, “it presents an exciting opportunity to leverage the power of technology and social networks and accelerate entrepreneurship across India while making online shopping convenient and trusted for thousands of new-to-e-commerce customers, especially in smaller towns and cities across the country”.

Meta jumped into the fray with its acquisition of Indian app Meesho a few years ago, while YouTube bought social commerce startup SimSim last year. In an interview with Bloomberg, Amazon India’s new country head Manish Tiwary said the focus for the e-commerce giant now is on developing local influencers to help sell to customers in smaller towns and cities. ShareChat, Myntra, and Shopsy are employing a similar strategy.

ShareChat, backed by Singapore’s Temasek, venture capital investment firm Lightspeed Venture Partners, and Chinese tech conglomerate Tencent, started using social and live commerce only a few months ago but has seen a lot of traction. The seven-year old social media platform valued at about $5 billion and available in about 15 Indian languages, has 180 million monthly active users.

Moj, which is owned by the same company as ShareChat, has a user base of more than 160 million users. This puts it in the same league as TikTok in the US, according to some sources. In India, TikTok was banned in 2020 along with dozens of other China-based apps with the Indian government citing national security concerns among other reasons.

ShareChat believes building trust with consumers is essential and wants to solve that with the help of “extremely relatable” influencers, instead of top influencers or celebrities, and more community-driven commerce.

Screenshot from a livestream commerce session for Swedish watch and accessories brand Daniel Wellington on Myntra Live featuring Indian actor Ayushmann Khurrana (R) with moderator Kamiya Jani (L).

Zunjarwad calls their local influencers “shopping buddies,” people who are not just curating products, but also deal hunting, discovering, and doing quality validation. Palkush Rai Chawla, ShareChat’s director of product management, says their tastes are closely aligned with the end customer.

Most players in the Indian ecosystem are betting on the potential of social and live commerce, even as major players like Meesho have pivoted to e-commerce. According to ShareChat, the number of daily active users on Moj are ten times those of most e-commerce players, and if it were to hypothetically convert 10 percent into shoppers, it could cultivate a massive shopper base at a relatively cheaper cost.

“This is how the economics will evolve in scale. We obviously have a long way to get there [though as] these [conversion] ratios in China are around 5-10 percent. That’s an aspirational number, which we are all chasing… the beauty of the economics is that from an acquisition point of view, a lot of it is organic,” Chawla said.

In India, we obviously have a long way to go [to get to the conversion] ratios in China... [but] we are all chasing that.

The once fragmented ecosystem is now beginning to come together for brand partners. Platforms like Softbank–backed Firework, a short-form web story video platform, are helping businesses bring shoppable videos and livestreaming to their apps. Sunil Nair, chief executive of Firework India, believes social and live commerce in India is poised to grow significantly over the next 36-48 months.

RedSeer Consulting predicts that the gross merchandise value of live commerce would touch $4-$5 billion in India by 2025, while social commerce is estimated to grab 5 percent of the Indian e-commerce market. “Consumers today are looking for entertainment in shopping and brands that embrace this transformation will be ahead of the curve. India will go the China way in live commerce,” Nair told BoF.

The pandemic has helped accelerate the adoption of new formats. According to Bain & Company, about 40 percent of online shoppers in India already made at least one purchase through social media channels like Facebook, Instagram, or Whatsapp in 2020.

Accenture forecasts that the social commerce opportunity globally will nearly triple to reach $1.2 trillion by 2025, accounting for 16.7 percent of the $7 trillion e-commerce total spend. While China is expected to remain the most advanced market, the firm predicts that the highest growth will be seen in developing markets such as India and Brazil, where social commerce has the potential to leapfrog e-commerce.

Gaurav Anand, chief digital and marketing officer of L’Oréal India, says that in a future increasingly reliant on omnichannel experiences, social commerce will create lucrative synergies and enable or enhance other technologies.

“Brands will need to leverage the power of technology to create digital experiences for their consumers. So technologies like AI, AR, VR, virtual try-ons, combined with the brands’ ability to understand and tap specific consumer segments, will drive social commerce going forward,” he said.

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