Group Buying & Social Ecommerce
There are two emerging e-commerce platforms in Indian Market,
- Social Ecommerce — Catering to Tier 2,3 & 4 cities by selling products through social posts using the vernacular platform approach. These platforms are dominated by micro-influencers who help the platform sell the products and in return earn commission
- Group Buy Ecommerce — Catering to Tier 2,3 & 4 cities by offering huge discounts on products when purchased in a group. These platforms are dominated by group buy discounts and limited hour deals.
The target group of both the platforms is the same and they do not care about product brands.
Pinduoduo (en.pinduoduo.com)
Founded: 2015
Countries Operational: China
Demographics: More than 50% of Customers Live in Tier 3 & 4 Cities with age group between 20 to 29 (70% Female)
Funding Raised: 1.7 Bil $ (IPO’ed in 2018)
Company Brief:
Pinduoduo Inc. is the largest interactive e-commerce platform in China and in the world. It is the second-largest online marketplace in China by a number of users and number of orders. It is also one of the world’s largest internet companies
Product:
Pinduoduo(PDD) brings a new discount shopping experience by leveraging social networks, offering an online group purchase option
Instead of a search-based model where consumers type in keywords to find the products they desire, products are directly displayed and recommended to them, resulting in higher buyer engagement.
“This model replicates the fun of discovery typically associated with offline shopping.”
Key Features:
- A discovery-based platform for product browsing
- Free Merchandise & Rewards for daily users
- Create a new group or join an existing group for higher savings
- Share with friends on the social network to complete a group purchase
- Users can add an audio message while sharing on the social platform
- Discounts can go up to 90% based on the number of users in the group
- C2M (Consumer-to-Manufacturer), consumers create value to the manufacturer — Supporting merchants by supplying consumer insights
- Free Delivery
Strengths:
- Customers are offered discounted price so they can get products at cheaper rates and retailers can clear their inventory
- Sharing on social platforms brings a lot of new traffic into the system
- The target market are the customers who do not care about brand and quality and is attracted by heavy discounts.
Opportunity:
- Increasing consumption power of lower-tier cities and rural markets.
- Internet pentration and increasing user base on social media
Indian Landscape
Potential Competitors — Social e-commerce platform
- Simsim (www.simsim.in)
Founded: 2019
Demographics: Vernacular Users focussed Tier 2 & 3 Cities
Funding Raised: 15.5 Mil $
Key Product Features — Selling product through videos describing its usage and reviews through community building
2. Mall91 (www.mall91.com)
Founded: 2018
Demographics: Vernacular Users focussed Tier 2 & 3 Cities
Funding Raised: 7.5 Mil $
Key Product Feature: Share product link in your network to get a commission of every purchase
3. Bulbul.tv (www.bulbul.tv)
Founded: 2018
Demographics: Users focussed Tier 2 & 3 Cities
Funding Raised: 8.7 Mil $
Key Product Features — Selling product through videos and live stream describing its usage and reviews through community building
Direct Competitors
DealShare (www.dealshare.in)
Founded: 2018
Countries Operational: India (Jaipur, Ahmedabad etc)
Demographics: Tier 2 & 3 Cities
Funding Raised: 32 Mil $
Company Brief:
DealShare, model mirrors that of China’s Pinduoduo, focuses on group buying of grocery and home merchandise targeted at middle and lower-income consumers in smaller cities and towns.
Its mission is to target the new 500Mn users in non-metro and rural markets who haven’t shopped enough online and who are still not comfortable on other platforms. These users are primarily on mobile & social media.
Product:
DealShare allows users to buy and share deals with their friends. It offers discounts depending on the number of people purchasing the products.
The idea is around demand aggregation (C2B) of mass-market products using social virality thereby significantly reducing operational costs.
Conclusion:
Social e-commerce has been a successful model in China and is now an emerging market in India with cheaper data and the Jio wave has given a boost to internet penetration in India. Vernacular users contribute to more than 80% of Internet users and they prefer consuming content in regional language and more interactive ways like videos and live streaming. Social e-commerce platforms have started emerging in India in early 2018 and have been seeing exponential growth
Other emerging competitors can be vernacular user-generated content platforms like Sharechat which has recently acquired Elanic an eCommerce platform focused in tier 2, 3 cities to get into social eCommerce. Similar platforms by bytedance backed Helo, have the potential to get into social eCommerce monetizing their existing DAUs.
References:
https://www.fbicgroup.com/sites/default/files/3CNE_Pinduoduo.pdf