Thanks to the crowning success of Pinduoduo in China, social e-commerce is the new business buzzword. The new e-commerce mantra is now striking roots in India, the second largest internet market in the world.
Over the last 2 months, two prominent Indian players, Meesho and Shop101 attracted handsome investments. While Meesho raised US 11.5 million in Series B funding from Sequoia India and others, Shop101 bagged USD 5 million in Series A round from Stellaris Venture Partner, TaxiForSure co-founder Raghunandan G and others.
Shop 101 leverages social media platforms and give merchants the logistics, payment and cash on delivery support. Unlike the Amazon-Flipkart model where the merchant is irrelevant or less important, the social e-commerce model is merchant heavy and gives them prominence. The product is designed in such a way that it is hassle-free and mobile-friendly so that big investment is avoided.
The Passage spoke to Abhinav Jain, the founder of Shop101 about challenges and prospects of social e-commerce in India. Excerpts from the interview:
TP: So what's Shop101 all about?
AJ: Shop101 helps merchants set up online stores using our app. The store can be used to upload products, ship merchandise and collect payments. This virtual store can be integrated with Facebook, WhatsApp and Instagram, the social media platforms popular in India. So effectively, we do three things: help people sell their own products, help people resell products, and for large manufacturers, place their products into the reselling supply chain. You can ship products to 2,6000 districts across the country, you can collect payment through cash on delivery, which is very popular in India, or via e-wallet, Paytm, online debit card, credit card etc. And you can process orders through SMS or email notification. We have done backward integration with factories, and wholesalers or suppliers, and those products can be directly sold from the Shop101 platform. It’s like a reseller model, you can start a business without any cost and can expand across India using a shipping and cash on delivery service and payment service. Then if you become a really big business, we can also help you build your own independent website. So you can basically build a business from zero and scale it up as per your own enthusiasm and excitement. if you're a large manufacturer, we can help you by providing your products to the retailers through the app.
TP: How does this model work?
AJ: If I’m a reseller, I can choose a product from Shop101 app, add profit margin for the product and then send the link to my friend. If you don't quote a margin yourself, there's a default margin which is already set, and you can just share that link directly, you will get the default amount. When your friends receive the link on Facebook or WhatsApp, they can click the link, it will open within the app, and your friend can choose from the products that you have put out. Once your friend has completed a purchase on Shop101, the product will be shipped directly to the customer. Once the money is collected, the wholesaler and the reseller are reimbursed.
TP: What inspired you to try social e-commerce in India?
AJ: About three years back, in 2015 when we were looking at the e-commerce space in India was dominated by Flipkart, Amazon and Snapdeal. There wasn't much technology available for small merchants or common people who wanted to become entrepreneurs. India already has 57 million merchants to be precise, and many more aspire to become one. And that's how we started looking at technology for commerce for small merchants. Then we figured out that social media to be combined with commerce, especially for this type of merchants where they could promote their products among friends and family and expand gradually to a much larger circle, first in the local area and then going bigger. Instagram in India was taking off at that point.
TP: What's the benefit of the customer?
AJ: For customers, it's like window shopping. My friend knows what kind of products I like.. If I like a red dress, my friend won't send me a white one. When I'm constantly showed the things I like, I may not buy it now. But maybe someday I will eventually buy it. Trust is another factor here. I would probably ask my friend, 'did you try this?' A yes from my him/her would convince me to buy. We don't disclose the number of customers, but let me just say it’s getting close to one million. About 40% of them are from the metropolis and tier I cities, and the rest from tier II to tier IV cities. Right now our content is in English, but we are experimenting with ads in Hindi Tamil and Telugu.
TP: Can a customer also be a reseller in Shop101?
AJ: Not entirely at present. However we have various offers. For today the scheme is that if five people buy from a single retailer, all five buyers will get a gift. It is like a game people are excited to play. It's much like a group buy. We're trying to keep the excitement going.
TP: Sounds quite like Pinduoduo. What do you think about their model?
AJ: I think Pinduoduo's is a unique model which has combined commerce and entertainment. People are enjoying, having fun while buying, the whole thing is on social media. That's something that we are weaving more and more into our product as well. Of course, our product is more traditional and is more commerce than just entertainment.
TP: Your product depends more on resellers while Pinduoduo is customer-centric. Do you see yourselves shifting to that kind of model?
AJ: No, not exactly like Pinduoduo. I think it'll have to be adapted to India. So that's what we are experimenting with this reseller model. It will have to be something that works for the people over here.
TP: What do you think is the difference between Chinese and Indian customers?
AJ: I think the Chinese market is more mature, the customers are already used to buying and paying online, and it is easy to pay using WeChat or Alipay and all those mechanisms. So it’s quicker. But India is a predominantly cash-on-delivery economy. The sale is completed only when the goods are delivered. So to approve groupbuy and the time to complete it is much longer.
TP: Pinduoduo is battling the counterfeit issues. How do you ensure quality control on this kind of platform?
AJ: For manufacturers and wholesalers supplying products to Shop101 platform, they are thoroughly verified. We asked them for the registration certificate and for a sample, and we make sure that the quality is good after the order is delivered, we will ask the reseller to rate the product and see if the product delivered was okay or not. If there are any repeated issues with the supplier, we will give them a warning and then de-lease them. So there is a strict quality and continuous quality monitoring process for the supplier. The situation is very favorable for social E-commerce now
TP: How are you different than other social e-commerce platforms in India?
AJ: Most of the other players only enable resellers to sell products from their supply. They don't enable people to sell their own goods.
TP: Even Flipkart, Amazon, Shopclues are also trying to promote their products through social media channels...
AJ: There is a difference. When you promote a product on social media, customers can go to other stores as well, because they're all interconnected, they are linked. On our platform, will not lead the customer to another store. So you can be comfortable while promoting your products on social media, if you're driving traffic, you will get the benefit.
TP: The field has seen a lot of funding this year. What drove this change?
AJ: Technology is deepening in India. Over the last one and half years, Reliance Jio was launched which has made internet and data very cheap in the country. Now everybody has access to 4G data, the country is evolving, people are getting more tech savvy and they are able to interact and sell and buy on mobile phones more and more and using social media. And that comfort of being able to choose a product online is growing dramatically. When we started, the comfort levels of seller or a buyer buying in tier II tier III city would be significantly lower. But as time has progressed, that comfort has grown dramatically and now we have reached a stage where people are very comfortable buying products. It doesn't matter whether I live in a small city, a small town, it's actually OK. Form the logistic standpoint, we are now delivering to 26,000 districts (26,000 pin codes) in the country, which is basically pretty much all of India is covered by our network, there is no place where products will not be delivered. So both from a user behaviour and infrastructure standpoint, the situation has evolved where it is the perfect time for such a model to work.