Today, Iβll share some knowledge about a new trend in commerce - social commerce.
Also, the newsletter is oriented a little differently this week. Do reply with feedback about what you like and what you donβt. Also π
Random fact of the week
India has a floating post office in Dal Lake, Srinagar. Amazing, isnβt it?
Social commerce
To put it in one line - social commerce is commerce that happens through social media. Facebook, Instagram, and WhatsApp, for example.
It is gaining a lot of popularity around the world, but especially in India. With WhatsApp becoming the super-app of India, people are conducting almost all kinds of businesses through it.
Consider a very simple scenario- how you currently buy clothes.
You go to a store, check out a few varieties and then pick the shirt that suits you the best. Often times, you also look for clothes online, but youβre worried about the quality of the shirts. A new brand is always a flag for not buying clothes.
As a result, you decide not to buy clothes online.
But, imagine one of your friends recommends something to you on WhatsApp. They come to you and say, βHey, I bought this shirt. I really liked it. Use this link to buy the shirt right now.β That makes it so much more compelling.
We have a bias for buying things that our friends and family recommend. Social commerce uses this bias and turns social media into a machine for the growth of small retailers.
Isnβt it e-commerce applied to social media?
Kind of, but not exactly. Because local retailers (who probably know you) reach out to you directly, you are more inclined to respond to their requests. This leads to a significant increase in sales for small retailers, vs. putting their products online.
At the same time, there is no burden of maintaining a large physical inventory, just like in e-commerce.
Even today, social media plays a big part in the growth of e-commerce.
Image source - Business Insider
The big opportunity
PayPalβs report on Social Commerce shows that, while surveying small business owners, 79% prefer selling through Social Media. Across Asia, India emerged as the top market in terms of using Facebook, WhatsApp, Twitter, and YouTube to sell goods and services.Β
Several startups have already sprung up in this space, for example, Meesho, Udaan, and Shopmatic. These companies are helping people resell products on social media.
Take the example of Meesho - a few months ago, it raised $125M in funding to grow its operations. Meesho is a marketplace that connects sellers with customers through social media. Founded in 2015, the company already has more than 2M sellers from 700 towns in India.
Meesho aims to have 18M new sellers by the end of next year.
More than 90% of small businesses in India are still offline. But with the omnipresence of WhatsApp, using it as a vehicle for growth is a no-brainer.
Future businesses around Social Commerce
While we are starting to see movement in this space, a lot is still to be explored. Example - customer relationship management platforms, vernacular capabilities of selling tools, and so on.
You could expect at least a few dozen businesses built around the concept of social commerce in the next few years.
What idea are you thinking of?
Next week, Iβll dive deeper into social commerce, and talk to a few co-founders working in this space. Wish me luck!
The Advisory Board, my second fiction book, comes out in a few weeks from now! Itβs a book about how taxi drivers are some of the best advisors in the world. Next week, Iβll share why I wrote a book about taxi drivers.
Cool photo of the week
When it is sunny in Seattle, I get this view from my office π
Thanks for reading :)
Hemant