Flipkart bets big on social commerce, a $70 bn market by 2030

Today 70% of Flipkart's customers come from tier-2 and tier 3 cities and with Shopsy, Flipkart aims to scale this to 90%

Flipkart is betting big on social commerce, which is the use of social network communities to drive e-commerce sales. Social commerce is expected to be about a $70 billion market opportunity in the next few years.

The Walmart-owned e-commerce giant recently launched Shopsy, an app that enables Indians to start their online businesses without any investment. With the ability to influence their local network and fulfill their aspirations, users of Shopsy are able to share catalogues of a wide selection of 15 crore products offered by Flipkart sellers. These range across fashion, beauty, mobiles, electronics, and home, with potential customers via popular social media and messaging apps.

With Shopsy, Flipkart aims to enable over 100 million online entrepreneurs in the next few years as they reap the benefits of digital commerce.

“It (Shopsy) is one of our top strategic priorities,” said Prakash Sikaria, senior vice president - growth and monetization, Flipkart, in an interview. “What a social platform like Shopsy is trying to do is to unlock this new base (of customers) and this ($70 billion market opportunity) is coming from there.”

Sikaria said there is a large base of customers known as the next 200 million users. When  Flipkart looked at the data, it was clear that one of the biggest challenges for these users not adopting digital commerce was accessibility and not being comfortable with the traditional e-commerce platforms. The company then decided to set up a social commerce platform such as Shopsy.

Within a month of its launch, Shopsy has already onboarded more than 2 lakh users. With the onset of the festive season, the platform aims to keep accelerating its growth over the next few months by ramping up features and offerings for Indians who are keen to start their social commerce journey. The company said Shopsy is growing 100 per cent week on week and the platform is demonstrating the behavior of a social app where virality is kicking in. Sikaria said Shopsy is expected to play a pivotal role during this festive season.

“We're looking at 20x growth from where we are now (as ) we get into the festive season, which would mean that a very meaningful share of the total Flipkart sales (would) come from Shopsy,” said Sikaria.

Analysts said with the rapid adoption of  Flipkart’s Shopsy platform, the firm would give serious competition to other social commerce firms and startups such as Meesho, DealShare, BulBul, GlowRoad, Mall91, and simsim.

 

Flipkart said that over the past decade, India has adapted well to social media, increasingly so in the past year owing to the pandemic and effective (multiple) lockdowns. It said the pandemic most certainly expedited the growth and reach of e-commerce in the country, something that was earlier forecasted for a couple of years at least. Today, Indians especially those in tier-2 and tier 3 cities are an important target market for these platforms to continue to expand.

In fact, today 70 per cent of Flipkart’s customers come from tier 2 and tier 3 cities. With Shopsy, Flipkart aims to scale this to 90 per cent. Flipkart believes gamification along with social commerce features will help it achieve this mission. One such feature is Shop & Earn, where users will be able to unlock higher incentives on achieving a certain weekly and monthly target. This kind of gamification will further lead to virality and evangelization for fringe e-commerce customers.

Shopsy has also announced the launch of a zero-commission marketplace. Through this initiative,  Flipkart will help organise and bring smaller sellers across fashion, grocery, and home categories, online. This will further enable and amplify the supply of products and catalogues on the platform, and spur e-commerce growth across tier 2 cities and towns that have been untouched by digital retail so far.

“We are at a phase where we are talking of bringing these fringe customers into digital commerce,” said Sikaria.

Flipkart also said due to the onset of the pandemic, several individual entrepreneurs struggled to realize their ambitions and faced logistical on-ground challenges that stalled their businesses to take off. The pandemic further induced a structural shift in the way entrepreneurs conduct business, consumers shop, and persuaded many small and micro businesses to adopt digital commerce to remain profitable. This has also created a huge opportunity for innovative e-commerce models that helps these businesses become digital brands, catering to pan India customer bases.

Individuals or small business owners can become resellers of Flipkart merchandise by registering on the Shopsy platform. Users can register on the Shopsy app using their phone numbers and begin their online entrepreneurial journey. They can reach potential customers via commonly used social media and messaging apps, place orders on their behalf, and earn commissions on transactions, where commission percentage will vary depending on the category of products being ordered. Shopsy sellers can utilize Flipkart’s catalog, established delivery networks, and infrastructure to bring reliability and speed. They can tap into new markets that can lead to scaling the business in future.

E-commerce—powered by cheap data, supply-side innovations, and digitally savvy customers—has become a $30 billion industry in India in fiscal year 2020. More than 100 million of India’s estimated 572 million Internet users purchase products online.

And the next frontier is social, according to a report titled ‘The Future of Commerce in India – the rise of social commerce’  by Bain & Company in partnership with Sequoia India.

The report expects that social commerce, which is a $1.5 billion to $2 billion market today, will be worth as much as $20 billion in just five years—and will likely hit nearly $70 billion by 2030. In short, India’s social commerce sector will be twice the size of the current e-commerce market within 10 years.

Digitally connected Indians spend an average of three hours per day online, of which more than two hours are consumed by messaging, social media networking, and watching videos. Millions of small retailers are finding innovative ways to sell directly to consumers through a variety of social formats, ranging from conversational commerce on chat platforms to video-led commerce to a vibrant social reseller community.

India’s e-commerce sector traditionally has been dominated by a few large players, but social commerce is paving the way for a more distributed model that’s built on community, connection, and trust. While traditional e-commerce will continue to grow, social-led models will help redefine the landscape over the next 5 to 10 years.

The social commerce space is already heating up due to increased investor interest and through strategic partnerships and mergers and acquisitions. Last month Google-owned YouTube, an online video sharing and social media platform, acquired social commerce media start-up simsim, betting on the emerging opportunity in the segment in India. Simsim is helping small businesses transition to e-commerce by using the power of video and creators. The simsim app serves as a platform to connect local businesses, influencers, and customers.

In April, Meesho became a unicorn after the social commerce startup raised $300 million in its new funding round led by Japan’s SoftBank Group Corp. In July, DealShare, a startup that has built an e-commerce platform for middle and lower-income groups of consumers in India, raised $144 million in its latest funding round led by Tiger Global. The firm is known for pioneering the community group buying (CGB) model in India. The funding has taken the valuation of the firm at $455 million.