How Social Commerce is redefining India’s E-commerce Ecosystem

Skillwise Solutions
5 min readJan 27, 2021

-Riya Sen

India’s social commerce industry, which today has a gross merchandise value (GMV) market of $1.5 to $2 billion; has the potential to grow to $16 to $20 billion in just five years.

The convergence of e-commerce has become enormous in our everyday lives. If you have a smartphone and an internet connection, either as a buyer or a seller, you have encountered e-commerce. This industry has seen some phenomenal growth in the past few years. Retail e-commerce has risen at an unprecedented pace since its introduction and is expected to hit $5 trillion in 2021. (Statista). In addition, a Bain-Flipkart study points out that over the next five years, the Indian e-retail market is projected to hit almost 300 to 350 million shoppers, propelling the online gross merchandise value (GMV) to $100 billion-$120 billion by 2025.

The majority of multinational corporations have made their way into the world of e-commerce. Everyone wants their piece of e-commerce, from big to little, from Moguls to locals.

When Covid broke out last year, several new business models appeared, some struggled, some proved to be vital to the daily life of a customer. 2–3 years down the road, the pandemic accelerated timelines and remedies that we figured would find their way into our lives had an impact in real time. One such model was ‘Social Commerce’ in the e-commerce domain. It has made e-commerce open to any age group and income group across the world over the past year.

It takes e-commerce to the mainstream; and I think it will absolutely redefine the way we look at e-commerce in 2021:

Social Commerce: The best of both worlds model

The word is self-explanatory in itself. Social Commerce puts together the highly engaged and large social media and the established popular conventional e-commerce model. Simply putting it on social media to buy and sell was never a new idea; but it was not coordinated or very large-scale. As the cause, the pandemic behaved. People lose access to essentials overnight. It was no longer easy or safe to order from platforms and stuff was still happening on the side of Covid. The MSMEs stepped up and found a massive opportunity across channels such as WhatsApp, Facebook, and Instagram to do business and appeal to customers.

Besides being easy and user-friendly, with the growing time spent online, commerce via social media has become a phenomenon. Digitally connected Indians spend an average of over three hours a day online, according to a Bain & Company survey; of which about two hours are consumed by texting, social media networking, and watching videos. The report already shows that in just five years, India’s social trade sector, which today is a $1.5 to $2 billion Gross Merchandise Value (GMV) industry, has the potential to rise to $16 to $20 billion, growing to $60 to $70 billion in revenue by 2030.

The Consumer in Social Commerce Ecosystem: It’s all about trust and convenience

The Bain & Company study also sheds light on what deters e-commerce from non-transacting customers. It’s an absence of faith. Social commerce brings a sense of culture, connection, and confidence to the experience of shopping. The report reports that 75% of transactions are made by a recognised agency. This is also valid for Tier 2 and Tier 3 customers who find it difficult to order online despite being totally comfortable with smartphones and the internet: digital privacy, complicated UI, lack of understanding of return policies, fear of a faulty product, and annoyance about not having a human link to resolve queries.

With various and engaging content types, social commerce provides customers with a simple and hassle-free product discovery process along with access to diversified categories of goods. It also provides vernacular content and search capabilities for small-town India, which is a major draw.

The Seller in Social Commerce Ecosystem: Building Micro-Entrepreneurs

The social-first model helps small merchants and retailers to remain ahead of the curve. In reality, the Bain & Company report reports that 85% of all social-commerce players are made up of small sellers. It further highlights the model’s ability to empower more than 40 million small businesses and entrepreneurs in India. Compared to e-commerce sites, it is an opportunity for these companies to gain consumers at low costs on the basis of faith, loyalty, and word of mouth. Sellers gain access to not only a large audience base, but also a deeper understanding of consumer behaviour, particularly in small-town India, through social exchange.

Social commerce also helps these micro-entrepreneurs to acquire authentic traffic and create customer loyalty based on interactions and organic interaction. In this sense, right now, WhatsApp is the most common site. During the lockdown time in India, about 40 percent of sales occurred through WhatsApp, according to most retailers. (Moneycontrol).

The 2021 trends of Social Commerce we can expect to see

While social commerce in India has gained widespread popularity, its real potential remains untapped. Multiple paths are yet to be explored. With the bulk of the audience moving from Facebook and Snapchat to Instagram; digital marketers have become the latest light of opportunities. Instagram has begun to send out specialised features and handles on the website to certain markets. It is likely to become the next big thing in the social commerce ecosystem; with more and more individuals making the transition to Instagram. On such platforms, we can also expect voice and vernacular to be major growth drivers; with small-town India being a major online shopping audience base. The environment is certainly evolving and quicker than ever; but understanding this transition and becoming agile is what will help players in the social commerce ecosystem. Until the next wave of change takes over, act and exploit the chance.