India's $70 billion social commerce opportunity by 2030

23 December 2020 Consultancy.in
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On track to becoming an ecommerce hotspot, India has all the makings of a booming social commerce market as well. A new Bain & Company report predicts a $20 billion social commerce industry in India by 2025. 

The same factors that make ecommerce a powerful force in India could pave the way for social commerce – the use of various social media platforms to advertise, sell and exchange products and services. Bain & Company worked with Sequoia to analyse this “new frontier” of ecommerce in India.

A key enabler of social commerce is high mobile usage, which there is no shortage of in India. Since the Jio revolution brought data prices down in 2016, the online-user base in India has skyrocketed. In 2017, a Boston Consulting Group (BCG) report predicted India would have 850 million online users by 2025.

Online users in India

According to Bain, this figure already stands at more than 570 million, behind only China from a global perspective. And the room for growth in India is staggering. With half a billion people online, Internet penetration in India stands at just over 40%, which means the majority of the population is yet to join this mammoth user base.

One thing that experts have noted in recent years is that online usage doesn’t translate into online maturity. Consumers use a wide variety of social media and communication platforms, but a relatively small share has adopted online payment infrastructure – a core enabler of ecommerce growth.

This shows up in the country’s ecommerce penetration numbers. Only 8% of Indians actually shop for products online. Of course, this still translates into a sizeable base of over 100 million people, but it remains below par by Indian standards. Online spending in India stands short of $300 million per year – significantly lower than in the US, China or even Brazil.

Social media usage is high in India

That being said, ecommerce in India is moving in the right direction, and at some speed. One aspect of online engagement that has hit home is the use of social media, messaging networks and video streaming platforms. According to Bain and Sequoia, this presents a big hint for retailers about where they should focus their marketing strategies.

“Digitally connected Indians spend an average of three hours per day online, of which more than two hours are consumed by messaging, social media networking and watching videos,” explained Arpan Sheth, Bain partner, APAC Technology lead and co-author of the report.

“By leveraging a variety of formats, ranging from conversational commerce on chat platforms to video-led commerce to a vibrant social reseller community, millions of small retailers are finding innovative ways to sell directly to consumers through social networks and social media.”

Social commerce could reach up to $70 billion by 2030

Indeed, social commerce could unlock the potential of more than 40 million small enterprises in India according to the report, offering them a direct line of communication to customers. Every retailer serves their own niche, and there is enough room in India’s vast consumer base for everyone.

“Social commerce is democratising India’s e-commerce sector, which has been dominated by a few large players, paving the way for a more distributed model that’s built on community, connection and trust. While traditional e-commerce will continue to grow, social-led models will help redefine the landscape over the next five to ten years,” added Sheth.

The numbers speak for themselves. Social commerce in India currently clocks a gross merchandise value (GMV) of around $2 billion. By 2025, this could hover between $16 billion and $20 billion according to Bain, with a potentially monumental jump to $70 billion by 2030. “In short, India’s social commerce sector will be two times the size of the current e-commerce market within ten years,” concluded Sheth.