The rise of social commerce, e-commerce and selling facilitated by social media- has made the experience of shopping convenient for consumers. However, this ease comes with an uncertainty as these platforms likely to disappear into thin air within just a few days of their formation. These social platforms not only increase the number of transactions between brands and consumers, they also handle their logistics, returns, payments, COD, disputes. Platforms like GlowRoad, along with Meesho and Shop101, operate through a B2B2C model where the reseller sends product images and description to potential buyers via social media. The reseller can add his profit margin once the end-customer chooses his product. He then adds the buyer’s address and after choosing a payment option, orders the product.
Reseller platforms like Meesho and Shop101 help create entrepreneurs and homepreneurs, others like CoutLoot help offline sellers go online with ease and without making any investment.
Push marketing helps acquire new customers
Social commerce platforms attract people from smaller cities, towns and villages as their applications are available in various vernacular and regional languages and the interface is simpler. They use a push marketing strategy, where the product is promoted on people’s phones using social media. This reduces the cost of their customer acquisition for these platforms.
Since these platforms target smaller cities and towns, they sell non-branded and cheaper products such as fashion and apparel, FMCG goods, beauty and grooming products, electronics, wearables and daily need products among other things.
Facilitating conversation between buyers and sellers
Social commerce platforms develop a trust factors amongst its consumers through platforms like WhatsApp, Facebook and Instagram. They facilitate conversation in a local language and through features such as check-out and offering video-based product experiences. This allows the seller to provide his buyers with more information about the product. On the other hand, it allows the buyer to bargain over the price of the product. The auto translate feature in apps translates the language to local language which leads to the parties trusting each other.
Despite these benefits, social commerce also has its share of challenges. At times, buyers buy their products directly from the website which makes the name of the resellers known to them. These platforms therefore, need to ensure that their name does not appear anywhere in the transaction process. They need to protect the interest of their resellers.
Another challenge that such platforms face is of shipping their products to smaller cities and towns. They are also responsible for handling and dispersing cash in the hands of the platform. Delivering products with low monetary value further adds to the operational burdens of these platforms.
Around 93 per cent of total commerce happening on these platforms is for unbranded products which makes them a pioneer of this largely untapped category in India. Such platforms are popular in China which sees a 63.2 percent year-on-year growth in them. One such platform Pinduoduo has become the country’s third largest app in just three years since it started. Its average order value is $6, as compared to $30 on competitors Taobao and Tmall. India too is witnessing similar growth which may reach heights in the next five years.