India has a fledgling social e-commerce market, whereas China is a different beast altogether.
Last July, Chinese social e-commerce giant Pinduoduo (PDD) raised USD 1.63 billion for its US IPO. PDD owes its popularity (in other words, valuation) to a unique e-commerce model which blends generous doses of entertainment with a great value proposition to make shopping a personable and enjoyable experience.
In India, social e-commerce players such as Meesho and Shop101 works on referral codes where the reseller plays the go-between using social media as a vehicle to push products.
The popularity of COD (cash on delivery), relatively higher return rate (compared to China), and the lack of integrated payment on dominant social media channels mean Indian social e-commerce is a little behind the curve.
However, the Chinese smartphone maker Xiaomi is betting against all odds to blaze a trail in Indian social e-commerce space.
Last week, Xiaomi debuted ShareSave, a “cross-border e-commerce platform”, in India.
The firm has plans to expand to more international markets later to sell products from Xiaomi’s ecosystem which are currently available only in Chinese market.
ShareSave offers three buying options: Pair-up, Drop and Kickstart – and the business model is eerily similar to Pinduoduo’s in China.
The question in everyone’s mind is: Can ShareSave piggyback on the success of Xiaomi in Indian smartphone market to make a mark?
With pair up option, the sender and the receiver of the link are entitled to the discount provided both order the same item.
To avail Drop, customers should get a group of people to click on the link he/she shares to get discounts. The link will be active for a limited time and more clicks translate to bigger discounts (up to 100%).
Both models are extremely popular in China, thanks to Pinduoduo. However, the only difference is, with PDD, the Pair-up is not limited to two people and the discounts will accrue as more people come in on the deal.
Meanwhile, Kickstart is a leaf out of Alibaba’s e-commerce platform Tmall. With Kickstart, customers can put down USD 0.2 as a deposit on a product. Once the deposits hit a critical mass, the users can get coupons worth 10 times the original deposit to purchase the product.
The three buying options- with a strong social component- can be perpetrated through social media channels.
The social aspect of ShareSave is a perfect reflection of the power of communities and Mi fans, Xiaomi claimed in the blog post.
Xiaomi is trying to build an ecosystem in India as home market China is too crowded. Last May, Xiaomi, in partnership with the NBFC license holder Krazybee, launched an online lending product. Later in December, Xiaomi said it would launch own payment product soon.
The cross-border e-commerce platform is the latest offering from the house of Xiaomi.
With Pinduoduo embroiled in the counterfeit scandal and a slew of other controversies post IPO, the platform might not go on an expansion mode yet. Xiaomi also has the first mover advantage in Indian market. ShareSave is a testing ground for Xiaomi, and the company hopes the India run will offer valuable insights for future growth.
This is just the beginning and Xiaomi will offer more products from China if ShareSave clicks into place, said an industry insider.
For now, Xiaomi has incubated and partnered with more than 100 IoT and lifestyle companies to develop a wide range of products, most of them not available in India.
The investors and entrepreneurs The Passage spoke to agreed on reasons as to how the Pinduoduo model might not work in India.
Reseller is at the core of social e-commerce in India. The customer likes a bit of handholding while shopping, said Abhinav Jain, founder of Shop101.
“The Chinese market is (more mature), the customers are used to buying online and paying online, and it is very easy to pay using WeChat or Alipay,” he said.
Jain further added that with xiaomi’s user base, to sell their own ecosystem products is not a problem in Pinduoduo model, But if the product range gets bigger with multiple resellers, Xiaomi needs to figure out the supply chain problems.
"The discount and groupbuy is human nature, of course people would be excited about it," he said.
According to Rahul Chowdhri, a partner in Stellaris Venture Partners and also an investor in Shop101, a big hurdle for the Pinduoduo model in India is the lack of an open-source social media like WeChat. Thus the sharing and group buying process would be much more complicated.
“Unlike WhatsApp, WeChat allows business to business transactions on its platform.
WhatsApp doesn’t allow mini-programs or offers logistics support. The lack of payment options is also a handicap,” he said, Though, the Indian players are taking heart from Pinduoduo. Jain said Shop101 is trying to introduce the group-buy feature and gamification to shopping.
“It will have to be something unique to India,” he said.