Indian e-commerce — powered by cheap data, supply-side innovations and digitally savvy customers, has become a $30 billion GMV industry in fiscal year 2020 (FY20). In addition, India has the second-highest number of connected users globally, at around 572 million with substantial room for growth (41 per cent penetration). However, we are in the early stages of online commerce, with only 8 per cent of Indians (about 105 million) who shop for products online, accounting for an average spend of $286 per year — much lower than other markets.
This is according to a new report titled, ‘The Future of Commerce in India — the rise of social commerce’, released today by Bain & Company in partnership with Sequoia India.
In short, India’s social commerce sector will be two times the size of the current e-commerce market within ten years, driven by formats ranging from conversational commerce on chat platforms to video-led commerce, or a vibrant social reseller community.
Commenting on the report, Arpan Sheth, partner and leader of Bain & Company’s Asia-Pacific Technology, Vector and Advanced Analytics practices, said, “Social commerce in India is broadening India’s e-commerce sector and paving the way for a model that’s built on community, connection and trust. While traditional e-commerce will continue to flourish, social-led models will broaden the reach of e-commerce for Indian consumers.”
Shraeyansh Thakur, VP, Sequoia Capital India LLP, believes the rise of online commerce has just begun — “Social commerce is playing a key role in democratizing online commerce, connecting brands, consumers and small businesses directly through social platforms and meeting the modern consumers’ need for personalized, differentiated products. Social-first models have been able to scale with much lower customer acquisition costs globally and we are seeing similar trends with Indian startups experimenting in this space. While early in its evolution in India, it’s set to scale rapidly in the next 5-10 years, offering a huge opportunity for innovative new products and business models.”