Social Commerce and Influence
This article was written by Kunal Sinha, Head of Account Planning at OnAds Communications
FROM CONNECTIONS TO COMMERCE
There’s a tectonic shift from the web to social platforms which is redefining India’s e-commerce landscape.
A survey by Nielsen in the end of 2019 showed that over 90% of the small and medium businesses sell directly through WhatsApp in India. This is more than 4x the number who sell on Flipkart and Amazon. It’s not surprising given that WhatsApp, at over 400M users, has five times the daily active user base than any commerce platform in India.
Anger and tensions around China’s current posture notwithstanding, this is a phenomenon which we must take inspiration from our neighbour. As WPP’s China report tells us, social commerce has grown rapidly over the last few years and now accounts for over 15% of online retail sales in China, growing 2x the rate of the overall online retail sector. From WeChat to Xiaohongshu, Pinduoduo to Douyin, these platforms are combining content with social influence to shorten the distance between engagement, influence and sale. And it isn’t just micro-entrepreneurs who are leveraging the potential. Brands ranging from LÓreal to Tesla to Shiseido and Nike have all realized that this is an essential part of their marketing mix.
THE POTENTIAL FOR SOCIAL COMMERCE IN INDIA
It has been forecast that social commerce will track a similar trajectory in India and could account for 15% to 20% of online retail in India in the next 10 years, creating a market worth $70B (more than 2x the size of the current e-com market in India).
COVID-19 is the perfect storm that has boosted the potential of social commerce. With traditional e-commerce players struggling with regulation and to fulfil demand, local entrepreneurs have stepped in to meet the demand for essentials. Amit Vasandani takes orders for alphonso mangoes to drive up to the gates of apartment buildings in a full truck, while Abdul Fishmonger and Pappu Greengrocer send out their daily list of available produce and their prices and deliver within a couple of hours. Navrang Carzspa offers free vehicle checkups, but makes money by disinfecting cars – after collecting information about your vehicle and location through Google Forms. They all leverage WhatsApp groups.
Established brands are missing the boat. With one exception – and it isn’t surprising that it is India’s most trusted brand: Amul. Their local distributors have been able to leverage building communities’ WhatsApp groups and Google forms to collect orders and payment, and fulfil them according to a set schedule.
Entrepreneurs in the beauty, fashion and wellness industry has already embraced social commerce with gusto. For companies like White Door Spa, over 30% of their sales, service queries and retail inquiries come through Instagram. Entrepreneurs have recognized that different platforms play different roles. For the apparel retailer Soch, branding and community engagement are the key KPIs on Instagram – realized through interactive question, filters and stickers. Business metrics are met through Facebook, where they run performance-oriented campaigns, which leads to sales through the website. Pinterest is a discoverability platform, where women look for inspiration on different styles at the start of the purchase journey. YouTube acts as a repository for all content and is hygiene.
Kantar and Google’s recent study, which tracks the customer journeys of grooming consumers across India, finds that up to 40% of all purchases are digitally influenced, while e-commerce is able to convert only 8% of that influence into sales. The potential for social commerce lies in that massive gap. Apart from fashion and beauty, electronics, daily needs, fresh produce and household goods represent a large opportunity for supermarkets and local kiranas alike.
Observational studies point to immense potential in several other categories: travel, where Instagram and Facebook have a very large influence in the choice of destinations, places to stay, eat and luxuriate (this becomes relevant once people start travelling again and look for safety); health and fitness, where live chats and content have driven up engagement while people stay at home.
The rise of social media and the dramatic change in content consumption behavior is also redefining what celebrity means in Bollywood-mad India, giving more firepower to social commerce.
New-to-Internet users are leapfrogging TV and consuming almost all their entertainment on YouTube, TikTok, Instagram and other social platforms, giving rise to a new generation of digital celebrities who connect directly with their fans. The new age consumers want authenticity and a deeper emotional connection, and these influencers are stepping up to fill that gap. This has resulted in a stratified influence ecosystem. Bollywood celebrities are dropping their guard and have moved to digital OTTs – their advocacy is growing in the digital space through fan groups. At the bottom are a host of micro-influencers with direct and personal connect. From a social commerce, the piece in the middle has promise. Occupied by OTT stars, TV celebrities, digital mavens, YouTubers and TikTokers, these new-age advocates are followed by millions. The influence and power that folks like Kusha Kapila, BeYounik, BeerBiceps and Shruti Arjun Anand hold is immense. It’s a power that is being leveraged by multi-level marketing (MLM) and teleshopping digital platforms.
Bulbul.tv is reimagining video commerce, leveraging new age influencers who have deeper connects with their followers. Several D2C brands, powered by social influencers, are growing nicely through Instagram and YouTube, with extremely low customer acquisition costs. I believe that this trend will gain strong momentum in the coming years.
BOOSTING ENTREPRENEURSHIP, ENABLING LIVELIHOODS
Women entrepreneurs are emerging as dominant sellers on social commerce sites as collaborative shopping tools and local language interfaces attract a new wave of customers from smaller towns and cities. At the same time, Covid-related job losses have compelled many to come up with new offers to supplement income or even make ends meet.
A slew of new formats for online commerce in local languages including chats, videos, and live in-app telecast, is opening more avenues for women to become micro-entrepreneurs. The opening up new categories is dominated by unbranded products which need a layer of trust that hasn’t been solved for, till date. This is where women sellers are stepping up to bridge the trust gap and in turn earn a livelihood for themselves.
GlowRoad is a women-focused reselling platform that enables its users to form their own networks and buy and sell through them. The startup mainly works with housewives, enabling them to sell products from the comfort of their homes through offline and online modes. At last count, there were 6 million resellers on their platform, spread across 2000 cities, with over 300 product categories on offer. The women-focused social community-based e-commerce platform WMall targets new-to-internet women users. It allows users to create and upload video content to help others in making better buying decisions.
With extensive experience in the Indian digital ecosystem, combined with recent deep dives into the customer journeys of India’s consumer goods and financial services industry, we at Onads bring a unique perspective to shaping the future of brands in the social commerce space. From leveraging KOLs, to creating the most effective UIs, to creating communities and conversations, we are ready to shape the future of brand engagement and market growth.