Social commerce refers to e-commerce transactions where buyers and sellers have more direct connection with each other before concluding a purchase, compared to a traditional e-commerce where buyers are choosing by searching or browsing from a digital catalogue.
This report on social commerce included platforms like Meesho but excluded peer-to-peer transactions through social media and online messengers.
RedSeer said social commerce will grow to a large share of India‘s e-commerce market over 2020-25, growing from 1-2 per cent of the USD 38 billion market in 2020 (translating to USD 0.38-0.76 billion) to 4-5 per cent of the forecasted USD 140 billion e-commerce market in 2025.
This would mean the social commerce segment could be between USD 5.6-7 billion in GMV by 2025. GMV is a term used in online retailing to indicate the gross merchandise value of the products sold through the marketplace over a certain period of time.
“Social commerce is inherently focussed on solving the trust issues of the next wave of online shoppers- as reflected in its high share of tier II-plus city consumers. We expect that a significant chunk of India’s over 250 million online shoppers of 2022 and beyond will be very comfortable with social commerce and this model will play a key role in extending ecommerce to the masses,” RedSeer Consulting Director Mrigank Gutgutia told PTI.
In parallel, social commerce players are creating and are expected to further create immense employment opportunities for resellers and suppliers on their platform, he added.
“As a result of this two-sided value creation, we expect that social commerce players would grow to 5 per cent of India’s USD 140 billion e-commerce market in the next five years, growing at a massive 65 per cent-plus CAGR. And, the initial results of social commerce’s growth are already visible- with a large social commerce player already being in the top 5 ecommerce players in India,” he said.
The report noted that there had been a 3X growth year-on-year in September 2020 in terms of gross GMV.
For social commerce players, 20 per cent of their customers are estimated to be from metros, 25 per cent from tier I cities and the remaining from tier II cities and beyond.