Business News: Social commerce can help leapfrog over 40 million small businesses into online commerce: Report

From $1.5-2 billion worth gross merchandise value (GMV) in FY20, social commerce is expected to be worth $16-20 billion in GMV by FY25. Representative image/Pixabay

Ease of Doing Business for MSMEs- Social commerce in India has the potential to empower over 40 million small businesses to leapfrog into online commerce as the sector is expected to grow at a compound annual growth rate (CAGR) of 55-60 per cent between the financial year 2019-20 and 2024-25, according to a report on India’s e-retail growth by Flipkart and Bain & Company. From $1.5-2 billion worth gross merchandise value (GMV) in FY20, social commerce is expected to be worth $16-20 billion in GMV by FY25. Meesho, DealShare, Shop101, Bulbul, Mall91, and more are among the startups operating in the social commerce space. Recently, Flipkart had launched a social commerce platform Shopsy for individuals and small entrepreneurs to sell online without any investment.

Over 75 per cent of resellers in the social commerce segment are women, mostly homemakers or self-employed or business owners, the report noted. Homemakers have been able to latch onto the idea of selling online from the comfort of their place with zero or minimal investment as it offered them the opportunity to also become financially independent and benefit by selling products to people initially in their local network through WhatsApp or Facebook.

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‘This will further democratise e-retail, with three in five social shoppers coming from tier-2/smaller towns,’ the report added. Social commerce has expanded significantly in small cities and towns as over 60 per cent of consumers are from Tier-II and other smaller markets. According to the report, 40 per cent online shoppers had made at least one purchase through social media in 2020 while an average shopper spending/month through social channels is Rs 500-600. However, for 62 per cent shoppers, variety and the ability to personalise are drivers of adoption for social commerce.

India is currently among the largest consumer markets in the world with a size of $810 billion retail market — the fourth largest in the world. The country is home to the third-largest online shopper base of 140 million, only behind China and the US, the report added. However, due to the pandemic, the retail market shrunk by 5 per cent in FY21 even as the e-retail sector witnessed a 25 per cent growth. The sector is likely to grow to $120–140 billion by FY26 – around 25–30 per cent per annum growth over the next five years led by smaller towns.