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E-commerce in India: The Three Acts

Act One: Classic E-commerce (Horizontal or Vertical) – This has been the biggest and most successful model of e-commerce in India thus far. Amazon, Flipkart, Big Basket, Grofers are among the top players.

Act Two: Social Commerce – The next lot of online commerce startups moved the battle to new grounds, ‘Social Media’. Leading the pack with Meesho that claims to have over 21,000 merchants (spread across 700 towns) and over 2 million sellers. Meesho has raised $200 million so far.

Other notable startups in this space are DealShare, GlowRoad and Shop101.

Unlike classic e-commerce, social commerce is primarily C2C where in sellers/resellers share product catalogues with their friends & family over social media platforms like Whatsapp, Facebook etc and if they get a request for a product they use their Social Commerce apps to place an order on customers behalf (Payment & Delivery happens directly to end customer).

The sweet spot that seems to work for social commerce is

1. Unorganised retail is over 10 times bigger than organised.
2. Over 90% of fashion retail is unorganised
3. Sellers solve problems of reach, trust and curation.
4. Women are a great fit for #2 & #3 (especially for Meesho)

Social Commerce startups also compete with other e-commerce companies focused on lower end/unbranded products such as Snapdeal & Paytm Mall.

However for the DTC brands that is the scope of this discussion, the TG, discovery, curation, pricing etc that makes for a great social commerce experience is less likely to work. What’s great for low cost, local brands is not good for slightly premium DTC experience.

Act Three: Live Commerce – ‘See Now, Buy Now’ is the latest variant of online commerce and it’s quite a range in Asia (read China). China currently has a market of about 500m viewers in live streaming – a figure still growing. Taobao Live grossed over $2.5 billion during the singles day shopping event held in 2019 in which 17,000 brands livestreamed.

Source: https://technode.com/2019/11/13/livestreams-on-taobao-live-earn-rmb-20-billion-in-sales-on-singles-day/

The arrival of Live commerce/live streaming is reminiscent of teleshopping networks that started back in 1980s when Home Shopping was a prominent way to order stuff. Watch a host presenting products on TV and place order via calling a toll free number. When TV moved to mobile and live streaming became prominent (thanks to penetration of smart phones and cheap data), it was only eminent that all things that made home shopping tick (Discovery, Impulse Purchasing, Influencer Push etc.) can be done better with mobile phones. Also, producing live streams is much easier than doing the same on TV.

Live commerce is starting to catch up in India too. Simsim (founded by my ex colleagues from Paytm) and Bulbul. TV are two prominent startups in this market and have each raised $15mn in funding so far.

While the premise for live-streaming commerce seems interesting, in the current avatar they seem to be focused on unbranded products and focussed on tier 2-4 cities.