The following article comes from BrandsFactory, author Xie Xiaodan
In Bangalore, Anu runs an offline boutique named after her. There are too many shopkeepers like Anu to count around the world. And many of them lost their stores because of misjudgments about inventory.
And Anu found another way. She found that with WhatsApp, she could contact suppliers at any time, receive photos of new products, and sell them through WhatsApp. This is a way to quickly and easily transform traditional retail businesses online. There are many sellers like Anu who are trying zero-stock sales around the world. Not only in India, this model is blooming all over the world.
Today, Anus in the Philippines can try to open a store through Resellee, while Anus living in Latin America can choose Elenas to build their own store, and then find a steady stream of orders through social media such as Facebook and Whatsapp.
In markets such as Southeast Asia, Latin America, and India, this social e-commerce business model is becoming one of the main online shopping methods for locals. In second- and third-tier cities, a large number of consumers’ shopping needs are not met by e-commerce platforms, and people spend a lot of time on Facebook, TikTok, Whatsapp and popular local social platforms. They not only use these platforms to watch videos and play games, but now also rely on these platforms to shop and share the products and services of Zongcao with their relatives and friends.
Chibo Tang, managing partner of Gobi Partners GBA, once revealed that social e-commerce sales will reach US$474 billion in 2021. According to data agency Statista, the social e-commerce market will grow from US$958 billion in 2022 to US$2.9 trillion by 2026. By 2028, this number will increase to US$3.37 trillion.
Therefore, under the market dividends, a steady stream of entrepreneurs and capital are pouring into the social e-commerce track, and a battle for social e-commerce has begun.
01MeeshoCopy Meesho
Among global social e-commerce platforms, Meesho from India is as famous as Pinduoduo.
Founded in 2015, Meesho means "my store" in the local language. In the early days, Meesho's sales mostly relied on sellers like Anu, who purchased products from dealers and sold them through WhatsApp and Facebook groups. This model quickly helped Meesho build a huge sales network, connecting millions of Indian social sellers with a large number of dispersed goods and service suppliers, and providing logistics, payment and other tools.
The Chinese market is no stranger to Meesho's business model. Insiders from Meesho's China region once told the media that Meesho's presence in the Indian market is more like a domestic market.
However, no one expected that Meesho would be able to reach the scale it is today just relying on these sellers. During the COVID-19 pandemic, Meesho quickly reached 120 million monthly active users (MAU) in a short period of time. The mainstream e-commerce platforms in India, Flipkart and Amazon, have approximately 200 million registered users. So far, of the 9 million e-commerce orders processed in India every day, orders from Meesho account for about 2.7 million, while the two giants account for 5 million.
In March 2022, it was reported that Meesho plans to be launched in early 2023. Recently, its chief experience officer Megha Agarwal also said that Meesho plans to be profitable within 1 to 2 years.
However, Meesho did not limit its vision to India. Instead, it set its sights on the world early and embarked on a journey to copy Meesho.
In 2020, Meesho's overseas social e-commerce investment layout took the lead in Latin America and participated in the seed round financing of Latin American social e-commerce platform Elenas.
Similar to Meesho, Elenas works with both local factories and importers and has established a sales network of more than 20,000 people. Through Elenas, users select the products they want to sell, and then share the product descriptions, pictures and other details to Facebook and Whatsapp. After placing an order, the supplier can deliver the package to the consumer through the cooperative logistics company. In March 2021, the platform received another US$6 million in Series A financing and further expanded from Colombia to Mexico.
In Latin America, the penetration rate of e-commerce is extremely low, but due to the nature of Latin Americans who love to share, sales are still conducted through a very traditional direct sales method - people will order products from magazines shared by friends. Therefore, social e-commerce has great potential. Data shows that in 2021, in Brazil and Mexico, the two largest economies in Latin America, the user penetration rates of social e-commerce will be 38.7% and 30.9% respectively.
In September 2021, Meesho landed another son in neighboring Southeast Asia. In September 2021, Indonesian social e-commerce platform Kitabeli revealed that it had raised another amount of funds based on the US$10 million Series A financing six months ago. Investors include Meesho co-founders Vidit Aatrey and Sanjeev Barnwal. Less than a year later, Kitabeli completed another $20 million in financing.
Kitabeli co-founder and CEO Prateek Chaturved said that the e-commerce markets in India and Indonesia have many similarities. For example, compared with first-tier cities, e-commerce in second-tier cities is far less developed. “We found that users in these small towns are usually shopping online for the first time, have a sense of distrust in non-face-to-face transactions, and need help and guidance when using various functions.”
Therefore, KitaBeli has integrated social features into its app, such as Mitras agents, recommendations, and group buying. KitaBeli's current main sales revenue comes from fast-moving consumer goods, including rice, oil, sugar, milk and personal care products. After placing an order, users can share the shopping link with friends and receive certain rewards. Chaturvedi said that through the DTC business model, the company hopes to cultivate user habits. According to reports, the current average order amount on the platform is between 5 and 10 US dollars, usually for group purchases of 5 to 25 people.
02Zhulu social e-commerce
To a certain extent, Meesho is following the development trend of social e-commerce in emerging markets around the world. In addition to India, Southeast Asia and Latin America have become the hottest regions for social e-commerce venture capital in the world, with a large number of social e-commerce startups active.
For example, India, where Meesho is located, can be said to be the hottest market for social e-commerce with various capitals competing for it. According to incomplete statistics from public information, there are 15 social e-commerce platforms in India, including Meesho.
In India, the social e-commerce battlefield where "gods" fight, the latest entrant is the global e-commerce giant Amazon. Not long ago, Amazon invested heavily in acquiring Indian social e-commerce GlowRoad for US$6.5 billion. In addition, social e-commerce Shopsy launched by Flipkart, a subsidiary of Walmart, Meesho supported by SoftBank and Facebook, Dealshare supported by Alpha Wave Global and Tiger Global, and Simsim acquired by YouTube, have also begun to stir up the local social e-commerce market in India.
At the same time, the social e-commerce track in Southeast Asian countries is also becoming increasingly popular. According to media statistics, the social e-commerce track in Southeast Asia completed 4 financings in 2020, and the number of financings doubled to 10 in 2021. Entering 2022, this craze has not yet extinguished. According to public report statistics, from January to August 2022, 11 companies deeply involved in the social e-commerce track in Southeast Asia have completed financing.
Together, these companies have cultivated the soil of social e-commerce in Southeast Asia. Data shows that social e-commerce in Southeast Asia is growing rapidly. In 2021 alone, orders from social e-commerce platforms in Southeast Asia increased by 102%, total merchandise transactions (GMV) increased by 91%, and the average revenue per order increased by 88%.
03Southeast Asia, fertile ground for social e-commerce
In fact, according to a survey conducted by Kantar Global Monitor in 2019, compared with the world, Southeast Asia naturally has the soil to develop e-commerce on social platforms.
Local consumers are very familiar with and rely on social platforms as a shopping method. Even Shopee’s rise in Southeast Asia is inseparable from the strategy of “stealing” from social platforms.
In 2015, in addition to offering free shipping and other offers to attract consumers, Shopee also added chat and other social features that make people obsessed after observing how consumers use Facebook. To make platform migration easier for merchants, Shopee has even built software that can import product listings from Facebook and Instagram directly into Shopee.
How does local social e-commerce work?
Judging from the business models of Meesho and Elenas, sellers mainly complete sales on platforms such as Whatsapp and Facebook. KitaBeli, which uses group buying as its business model, operates a Whatsapp community and acquires customers by sharing limited-time discount coupons, special offers and user prizes on this channel.
The company's CEO Prateek Chaturvedi once explained to the media that when Kitabeli builds a group buying ecosystem, it will first hire agents to go to local communities to encourage people to install the application and teach them how to use it, and then by formulating time-based discounts, users will be encouraged to share the transaction with their friends. So when one user purchases an item, typically three or four people in the same community also purchase it within a few hours.
In addition to mass social platforms like Facebook, in some countries, consumers and sellers have some new options. For example, in Vietnam, the local social platform Zalo is also one of the shopping channels for locals.
In the Philippines, in addition to operating Facebook, Facebook Messenger and other platforms, the social e-commerce platform Resellee also operates for users on Viber. Bagy, a Brazilian social e-commerce platform, helps small and medium-sized enterprises, individuals and Internet celebrities build their own stores in a simple and fast way. After users build a store, in addition to sharing it on Instagram and Facebook, they can also share it on the Latin American e-commerce platform Mercado Libre.
In addition, short videos, a new social media, are also playing an increasingly important role. Facebook found through data that consumers in remote areas of Vietnam rely more on shopping through chat and short videos.
As TIkTok advances its e-commerce business, social e-commerce has once again revealed its possibilities. An industry source close to TikTok once revealed a set of data. As of the end of July, Indonesia, the largest of the six sites in Southeast Asia, had an average daily GMV of 6-8 million US dollars, followed by Vietnam with 1 million US dollars, Thailand with 800,000 US dollars, the Philippines with 400,000 US dollars, and Malaysia with 240,000 US dollars.
SocialEpoch recommendation:The end of social networking is selling goods. From India, Southeast Asia to Latin America, from Elenas to Meesho, GlowRoad, Shopsy, Dealshare, and Simsim, they all adopt the S2B2C social e-commerce model. These platforms (Supply) empower each distributor (small B user) through products and SaaS tools, allowing each of them to build their own social digital micro-store to sell goods to customers in their social circle. In this way, the platform can make money, distributors can make money, and customers can buy the products they want in a trustworthy social circle, killing three birds with one stone.
