Life is a very different experience in small towns in India compared to the larger metro cities, more so when it comes to commerce and shopping. Growing up in Guwahati, a small town in North-East India, I have very fond memories of how shopping was a social experience for all of us. I used to observe how my family elders/relatives used to go shopping for groceries and daily essentials. They used to go with all her neighborhood friends as one big social group, they used to figure out where the best deals on rice or wheat or vegetables were, they would take great joy in bargaining with the shopkeeper or vendor and come back home with bags full of groceries. For my relatives and neighbors, shopping was more than a transaction, the social experience of shopping together in a group mattered more. And this is a larger reality for families across India’s small towns, where shopping dynamics are extremely different from India’s top 5-10 percent who live in India’s large, metro cities. Customers from low-mid income customer segments are extremely value conscious, prefer a social shopping experience, and need to have social trust built in the transaction channel.
In India, we live in closely-knit communities, wherein relationships with our family, neighbors, and relatives are inherently important. Ours is a cohesive community, wherein we often end up making decisions that are aligned and agreeable to people we care about. Social shopping may seem like a new concept, but in reality, in our real lives, shopping is meant to be ‘interactive and fun’ and purchases are regularly informed by friends and family.
This new emergence in e-commerce, which is gaining popularity, is called – ‘group buying’, a method wherein friends, relatives or a group of people can collaborate to buy products together and enjoy the benefit of bulk discounts across groceries, daily essentials, home, and kitchen items and other categories. Group buying has tried to mimic the offline shopping experience online by building community via the group buying model, driving engagement via gamification, and offering personalized experiences and value via recommendations.
The core of the experience is group purchase, where buyers form a group in order to receive discounts from suppliers. For each item, there are two prices – one for individual purchases and one for group purchases. If the user opts for a group purchase, then the customer can start a new shopping group or join an existing shopping group of friends or neighbors. Once the minimum size shopping group is filled with customers, the purchase is confirmed at the best prices, and the product is shipped.
Group buying is significant because it enables behaviors associated with offline commerce (sharing products or browsing a shopping mall with friends) in an online format. It means investing in creating physical world experiences online -- specifically bringing the fun of shopping offline to online platforms.
Why is Group Buying Significant for India?
E-commerce in small-town India remains an untapped opportunity - India is still in the early stages of online commerce: Only 8 percent of Indians (105 million) shop online for products, with an average spend of $286 per year—much lower than other markets. India’s current e-commerce model is skewed toward affluent customers in big cities, it excludes the needs of the 90 percent population from small towns.
Social commerce is democratizing India’s e-commerce sector, which has been dominated by a few large players, paving the way for a more distributed model that’s built on community, connection, and trust. Social commerce would increasingly target a highly underserved customer segment that can be reached and served through social offerings, customers who are extremely price/value conscious in categories like grocery and fashion.
Future of Group Buying and Social Commerce
We have seen tremendous success in group-buying platforms in emerging economies like Pinduoduo in China, Facily in Brazil, Kitabeli in Indonesia, and Gobillion in India, where customers transitioned from offline retail to online formats through social buying. From a global outlook, the future of e-commerce lies in building community in e-commerce, wherein customers get a better price, enjoy local deals, and get a superior customer experience.
This is a huge opportunity for e-commerce companies to build a social experience into their commerce platforms to take share from transactional platforms and expand e-commerce’s overall share of spend in customers’ wallets. By building sharing use cases and fun experiences that mimic the fun of real-world shopping, commerce’s offline to online transition will accelerate in India and other emerging markets.