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Interactive & Social Commerce and What we can learn from the East.
THREAD:
THREAD:
1/ We go to a store and end up purchasing things that weren't even on our list, don't we?
The best stores have so apt placements coupled with the right amount of cognitive load that shoppers find hard to resist.
The best stores have so apt placements coupled with the right amount of cognitive load that shoppers find hard to resist.
2/ It's a habit to roam around and see if you can find something needed in the future, and buy it on the same trip.
Also, It has a social angle too (Going bazaar with friends and family) in India.
Also, It has a social angle too (Going bazaar with friends and family) in India.
3/ But with the advent of online shopping and convenience, we started missing the interactive and social aspects.
Although companies did create recommendation engines and bundled offers, it has still missed the impact on many user segments.
Although companies did create recommendation engines and bundled offers, it has still missed the impact on many user segments.
4/ Companies are taking three approaches to make the experience as close as offline, if not better.
1. Influencer led (Impulse creation)
2. Interactive (gamification)
3. Social commerce (group buying)
1. Influencer led (Impulse creation)
2. Interactive (gamification)
3. Social commerce (group buying)
5/ Influencer & Interactive commerce is something we all have experienced.
But combined with group buying, if done right, it can be larger than what we see from the top. It appeals to tier 3, 4 cities, and a few tiers 2 as well.
But combined with group buying, if done right, it can be larger than what we see from the top. It appeals to tier 3, 4 cities, and a few tiers 2 as well.
6/ Pinduoduo of China is a great example (230 billion USD company as I write). And it happened in just 5 years.
They have nailed the social commerce in tier 3, 4 cities, accounting for 39% of retail in tier 4.
They have nailed the social commerce in tier 3, 4 cities, accounting for 39% of retail in tier 4.
7/ For those who haven’t heard of it, Pinduoduo gives a hugely discounted price if you buy with a group of friends. Initially, It started as a WeChat program.
It has a C2M model where it eliminates the middle-men and directs the robust feedback to manufacturers.
It has a C2M model where it eliminates the middle-men and directs the robust feedback to manufacturers.
8/ It helps manufacturers plan the inventory, logistics and sense the demand better.
C2M model gives the leeway to slash prices and a better trajectory towards profitability.
It also has a strong recommendation engine and has enabled live chat/video with the sellers.
C2M model gives the leeway to slash prices and a better trajectory towards profitability.
It also has a strong recommendation engine and has enabled live chat/video with the sellers.
9/ Combined with the trick to let users buy at a discounted price and then form a group within 24 hrs to get the item dispatched, it creates a sense of urgency.
It has 7-day retention of 77% and boasts a CAC of ~1.6 USD compared to ~40 USD of competitors.
It has 7-day retention of 77% and boasts a CAC of ~1.6 USD compared to ~40 USD of competitors.
10/ Now, this model can’t be emulated by the whole world due to differences in culture, per capita and other factors affecting the economics of this business.
Different income segments would require a different proportion of the 3 approaches to have an appeal.
Different income segments would require a different proportion of the 3 approaches to have an appeal.
11/ Social reselling, group buying, and social media-induced selling (Instagram/Facebook) are the few experiments running in India. According to a report, they have a GMV of $400 Mn, $200 Mn & $1200 Mn each.
12/ Together, social commerce amounts to $1.5-2 Bn GMV now and could scale to $16-20Bn GMV by 2025!
India has already seen different layers in Fintech, commerce, ed-tech etc, developing for various tiers due to gaps in per capita and pertaining economics of the region.
India has already seen different layers in Fintech, commerce, ed-tech etc, developing for various tiers due to gaps in per capita and pertaining economics of the region.
13/ Now we can see even more experiments to cater to each cohort of consumers, and it will be great to watch each pin-code getting the best in the years to come!
