The novel pandemic has significantly modified the operations of the retail industry around the world. Ranging from small brands to mega-retailers, the early 2020 Covid wave compelled everyone to rapidly discover new ways of reaching their customers. Amid the lockdowns, e-commerce platforms made a difference in bridging the hole and witnessed a significant rise in online sales.
In FY20, the social commerce industry in India was worth $1.5–2 billion. According to a 2021 Bain & Company report, it has the potential to grow to $16–20 billion in FY25, at a CAGR of 55-60 percent.
Let’s look at some of the key industry trends that will influence and drive social commerce in the retail industry of India Inc.:-
Finding One’s Voice in ‘Metaverse’ - Metaverse is an apt term to describe how our lives are becoming more integrated with the realities of the digital world. While some sectors have started exploring the possibilities of this, the retail industry is still finding its grip.
The rise of virtual stores on social media platforms like Instagram and Facebook is one aspect of a larger trend that the Indian retail industry needs to amplify to make it more engaging for the consumers.
With the ever-changing digital landscape, finding one’s creative outlet will be the gamechanger.
READ MORE: How Social Commerce will Fuel Growth in the Retail Sector
The Influence of ‘Influencers’ and Celebrity Collaborations - Brands across the world have understood the power and reach of influencer marketing. Reports indicate that the Rs 900 crore market would grow 25 percent annually to become a Rs 2,000 crore industry by 2025. Retailers are reaching out to both macro and micro-influencers to create buzz around the products and eventually drive sales by creating customized promo codes and discounts.
The differentiating factor would be to select the right influencer for the product. For instance, for promoting organic walnuts, food bloggers can help tap the right audience as they are able to integrate the product in their recipes and highlight its USP. On the other hand, a travel influencer might yield a lesser-than-expected engagement for the same product.
In the past year and a half, celebrity collaborations for products that appeal to a mass audience have increased. Examples include brands like H&M and BTPL collaborating with celebrity designers to create unique experiences that make luxury affordable for Indian consumers. The recent collaboration of Aditya Birla Fashion and Retail, and ace designer Masaba Gupta, is another classic example of Indian retail diversifying.
Rise of Regional Penetration and Community Buying - Startups such as DealShare and CityMall, Meesho, Mall91 among others, have optimized the business model of social commerce. They create a network of community leaders or resellers. This network has a strong presence in the Tier-III and regional markets of India.
As part of their roles, these resellers collect orders from their networks on social media by sharing product catalogs over WhatsApp. By ordering daily essential items and groceries in a large amount, the resellers get these items at a discounted price from wholesalers. This model of social commerce helps startups reduce their customer acquisition costs since they leverage the social connections of their resellers.
While the food and grocery industry has already realized the potential of this model for regional sales, the retail industry is still figuring out how to make this an end-to-end model. Brands like Amway did this in the past by empowering housewives.
Concludingly, while social commerce is still evolving and is being tested by both brands and customers, the technology is there. This provides the perfect opportunity for retailers to plunge in, test with social shopping, and rise ahead of the curve.