The emergence of social commerce: Why are brands becoming aware of it?

With the introduction of the internet, the reach of commerce has significantly expanded. However, it goes beyond just e-commerce, as we are now learning about social commerce. India has experienced significant internet adoption over the past ten years, with social media becoming incresingly significant. People from all walks of life are now using social media platforms because cheap data packages are readily available. As a result, these platforms can not only give brands visibility, but also an opportunity for sales. Therefore, social commerce is becoming more and more significant for brands across all categories. Social media platforms play a crucial role in the shopping experience in social commerce (from product discovery and research to the checkout process).

According to industry insiders, India's social commerce market is currently estimated to be worth $2 billion, is predicted to grow at a CAGR of 50–60% over the course of the next five years, according to industry insiders.

"Globally, the social commerce market is estimated to have grown 2.5 times, i.e., $1.2 trillion from roughly $490 billion over the past few years," says Sharukh Lakhani, AVP - Marketplace, Havas Media Group India. Currently valued at $2 billion in India, this market is anticipated to expand at a CAGR of 50–60% over the following five years.

Given the fact that more and more people use social media every year, these statistics are hardly shocking. Nearly 70% of Indians are thought to be active users of social media at this time.

According to Vishal Jacob, Chief Digital Officer at Wavemaker India, brands in all industries utilize social commerce. "However, categories like fashion and lifestyle, beauty & personal care, were the early adopters, and they have been scaling steadily. According to him, travel and the F&B (Food and Beverage) industry have begun to use social commerce extensively.

"Social commerce in India may be brand-, community-, or Key Opinion Leader (KOL)-led. In India, brands drive 70% of social commerce, which also includes conversational commerce (source: Essence report). The main goals of social commerce for brands are to reduce any communication barriers surrounding consideration and to speed up the consumer journey from inspiration to purchase. Another reason is to reach out to and persuade new users in non-metro markets, where social media platforms can succeed quite well.

The goal of social commerce is undeniable in a nation where nearly 1.5 billion people are anticipated to use social media by 2040. One of the most effective marketing strategies is probably social commerce, which reaches non-metro markets. Brands can now attract customers from all over the nation.

According to the co-founders of ARATA, Dhruv Madhok and Dhruv Bhasin, 40–50% of their budget is used to produce social commerce advertisements. It is simpler to convert our primary target audience into potential customers because they are active on the main social media platforms. Reviews, comments, and other forms of social proofing are very helpful. Customers are becoming more informed, and they now read reviews before making a decision. Additionally, user recommendations and referrals are crucial in converting our target prospects into actual brand buyers. Our advertising budget ranges between 40 and 50 percent for social commerce. They claim that we consistently reduce a marketing budget by 10% to 15% every quarter.

Because we can reach the right audiences there, we've chosen Facebook, YouTube, and Instagram as our main social commerce channels. We use automated retargeting campaigns, WhatsApp AI bots, and CRM retention tools for our social commerce activities. Around 40% of our sales come from e-commerce channels, and 20% to 22% of those sales come from social media, primarily through user growth, they add.

YouTube is the most popular social media platform in India, according to a report by AnyMind Group titled "State of Influencer marketing in India 2021." While compared to other social media platforms during 2020–21, Facebook and Twitter experienced a significant increase.

According to Ritika Arora, Senior Director, E-commerce and New Brands at Bombay Shaving Company, "Many social commerce sites have a strong presence in tier 2 and tier 3 cities, and those are the convenient mode of shopping for customers there. Social commerce has demonstrated to be a successful method of connecting with customers, as seen in southern India, where we recently scaled up retail distribution. As we enter the women's hygiene and grooming category, a new user base has emerged on the existing channels. Therefore, social commerce has an effect when the business strategy is in line with the platform's fundamental characteristics.

"E-commerce accounts for about 50% of our current business. Social commerce occasionally makes up about 20% of that business's total revenue. According to us, social commerce performs best when effectively leveraged and scaled across channels during special occasions and events. We dedicate between 8 and 10 percent of our marketing budget to social commerce," she says.

The social media landscape has changed as a result of the emergence of new domestic brands that promise better quality and ethically sound products. Brands are connecting with their target audience on social media, which has helped them establish themselves in a competitive market. Customer feedback in the form of reviews, ratings, discussions, and more is very helpful for a brand's development.

Chief Business Officer at Plum, Abhishek Agrawal, states that "In social commerce, the direct conversation with consumers helps a brand market their products in a much more convincing way than the traditional way of selling online. Second, a tonne of content the brand could not otherwise produce is generated automatically. Influencers and consumers both provide rich and timely feedback on the products.

In addition to using Trell and Foxy, we are active on Instagram, Facebook, and YouTube. On our website plumgoodness.com, we are also using the recently launched live commerce features. We deploy creatives, videos, and influencers based on our in-depth understanding of which assets are effective for which TG. Since the roles that platforms like Facebook and Instagram play differ, so do the assets that are deployed on them. Additionally, we collaborate with Google on GDN, Paid Search, and YouTube. For us, social commerce will be crucial to bridging the divide between the 600 million online users and the 160 million people who are currently transacting.

According to experts, social commerce is more than just e-Commerce promotion on social media. "In social commerce, you need to have a proper content strategy woven around product sales," says Anisha Iyer, CEO of OMD India. In terms of content marketing, it typically focuses on engagement rather than selling. But there is a chance to conduct content marketing with a sales-oriented focus in social commerce. As a result, social commerce shouldn't be considered a platform for e-Commerce marketing. It should be viewed less as a media strategy and more as an extension of a brand's content strategy.

It is no secret that people today are homebodies due the pandemic and the shift toward indoor living. As a result, social commerce is becoming more and more necessary. Leading e-commerce businesses have already entered the social commerce space. For the convenience of business, it's interesting to note that social media platforms are also prepared to support social commerce features. Facebook added new tools in 2020 to aid in the success of social commerce. Users can search for a store from the app directory using WhatsApp's Business Profile, a feature that was introduced in Brazil in 2021.

Because their offline businesses were completely shut down during the Covid-19 pandemic, some brands turned to social commerce. They are still in a "wait and watch" position before deciding on the next step, despite the fact that it worked out well for them during that time.

Spykar is one such brand in the fashion sector. The CEO and co-founder of Spykar, Sanjay Vakharia, states, "We began social commerce in mid-2020. It worked well for us and was necessary at the time. However, the Covid-19 era was a different time, so we haven't made any significant decisions about it yet. We'd like to look at the social commerce trends over the course of a year during a non-Covid period. In that regard, the year 2022 will be very significant for us. We can be significantly more aggressive or more cautious in 2023 with social commerce, depending on the outcomes of this year.

According to Vakharia, they have a presence on Facebook and Instagram, and influencers run 70–80% of their campaigns. There aren't many static campaigns. Currently, e-Commerce accounts for 18–20% of our revenue, and of that, 10-12% comes from social commerce. About 5% of our marketing budgets are allocated to social commerce.

On the other hand, prominent saree manufacturer Kankatala appears to be very adamant about it. Their budget for social commerce has been growing at a 40% annual rate. Anirudh Kankatala, Director at Kankatala, states, "We started social commerce at the end of 2016 because we had noticed that consumers were quickly utilizing social media and that several new social channels were emerging. We saw a similar opportunity there because many multinational companies in this sector were using those platforms successfully. We began with Facebook and soon switched to Instagram. We have joined Pinterest in addition to these two.

"We consider our customers to be our best brand ambassadors. As a result, we refer to them as the "Queens" of our brand when posting their pictures in our client diaries. In addition, we regularly run campaigns to highlight the beauty of Indian weaves on all of our social media channels, as well as quarterly collaborations with social media influencers, the man adds.

The introduction of cutting-edge technologies like Metaverse or Virtual Reality will change the world of social commerce, according to Anisha Iyer, CEO of OMD India (VR). "Such technologies will without a doubt change the social commerce experience," she asserts. For instance, if we are trying to sell lipstick today, we will find an influencer to wear it and have her demonstrate different shades in a video or reel. With the introduction of the Metaverse or VR, you will suddenly find yourself inside the world of a fashion show where you will see women doing ramp walks while wearing various shades of that lipstick. You can purchase whichever shade or sample you prefer. Thus, it will improve customers' overall experience. However, unless they take really drastic action and personalize the brand experience, I don't believe it will significantly alter the fate of the brands.

When it comes to social commerce, it is simple to understand why augmented reality is appealing. Customers can virtually try out products with augmented reality, just as they can with e-commerce sites that let them examine products in-depth without physically visiting the store. The actual nature of the product is much better understood. IKEA Studio developed a shoppable augmented reality "escape room" game for Snapchat in February 2021 as a fun way to organize and declutter your homes. Customers could use their phone's camera to point anywhere in this game to find a cluttered augmented 3D room. The goal was to organize the space.

According to Bata India, in addition to utilizing some cutting-edge technologies like AI and AR, they are also in the process of introducing a few new use cases for these technologies. "We have a service, 'Scan to Find your shoe size,' which uses Augmented Reality (AR) to help consumers," says Anand Narang, VP-Marketing and Consumer Experience at Bata India Limited. in measuring their feet size and getting the suggested Bata shoe size. Before ordering shoes from bata.in, customers can use this while relaxing at home. We use artificial intelligence (AI), data science, and predictive analytics to recommend the best product to customers in our loyalty program. We are also developing some intriguing VR and AR use cases, which we will eventually release.

The advantages of social commerce are numerous today, ranging from improved audience growth to a better understanding of customer insights and increased customer engagement. In the grand scheme of things, social commerce perfectly fits in with our desire to make consumers' shopping simple and convenient. We have a number of channels for this, including Bata Chatshop, WhatsApp Shopping, social media (Facebook, Instagram), Google Shopping, and CRM channel. Currently, 10-15% of our total sales come from sales made through digital channels. He says that our digital expenditures range from 25% to 30% per month.

According to Sharukh Lakhani, AVP - Marketplace, Havas Media Group India, recently, many other businesses have adopted the newest technologies, which have significantly changed the overall shopping experience. "Snapchat has announced a new augmented reality (AR) shopping experience that will allow brands to create AR lenses to help users try on new shoes and clothes. Together, Puma and Ralph Lauren will test this concept first before it is eventually made available to other brands. ModiIFace, a new AI-driven virtual cosmetics technology from Nykaa, gives users a real-time, lifelike view of the products. With Lenskart's AR, users can select from over 10,000 different styles of frames and place them on their faces. Flipkart also introduced an augmented reality (AR) "view-in-my-room" feature on its app, enabling users to visualize how the furniture and home category products would look inside their homes.

According to Dabur India Ltd., cutting-edge technologies have greatly benefited them. Smerth Khanna, Business Head- E-commerce, Dabur India Ltd, states, "You will find a lot of conversations about a brand, the areas of concern, global trends, etc, on the internet. Therefore, it is the responsibility of every brand to separate the voice from the noise. With AI in place, Online Reputation Management (ORM) as a whole is now very simple. If there is confusion regarding your brand, you can go and please the customers. We are using it to provide answers to almost 80% of the queries. We also heavily utilize augmented reality, and we're considering using virtual reality for some of our upcoming launches.

"As you can see, the idea of market share was mentioned earlier. Through their market shares, the businesses previously monitored their success rates. The conflict now, however, is between market share and mind share. Today, market share is actually driven by mind share, which social commerce takes care of. Therefore, a brand must guarantee that its mind share is at the top, which is why social commerce is becoming so important. E-Commerce now accounts for a very high single-digit percentage of our total revenue. Social commerce currently makes a small contribution, but it is catching up very quickly. For us, social commerce moves more quickly than e-commerce, he claims.

Brands are primarily targeting young people with this new form of marketing, even though we appear to be transitioning from e-commerce to social commerce overall. The fact that young people are more comfortable using the internet and all of its various features helps social commerce be used practically. It also helps if the brand in question is modern and, of course, native.

According to Voltas Ltd., social commerce has made it easier for them to reach the Millennial and Gen Z populations, who are heavily present on social media platforms. The summer campaign, "Ghar le aao, pahadon wali saaf hawa," for Voltas Ltd.'s new line of PureAir air conditioners, was launched on the company's social media platforms, according to Deba Ghoshal, Vice President and Head of Marketing. The campaign was created to convey the idea that the new air conditioner is intended to provide cool, pure, and clean air (like a mountain breeze) in the comfort of one's own home. We have a presence across all digital platforms, including Facebook and Instagram for social media.

"Roughly 25% of our total marketing expenditures are made online. About one-third of our digital expenditures are spent on social platforms. We consistently produce content and campaigns that are related to current events, and we work to evoke strong emotions in our readers through our posts. We think that starting a conversation on timely days will give our brand the advantage to understand our customers better," he adds.

Social commerce is about going where the customers are, according to Rage Coffee. "The Ragers community that we have curated is very active on social media, making social commerce an extremely suitable platform for us," says Bharat Sethi, founder and CEO of Rage Coffee. Our preferred platforms have been Facebook and Instagram. Through Instagram, we can directly interact with the Ragers community while promoting coffee, introducing new items, exchanging tips and recipes, and improving the coffee experience. We work with influencers on various platforms to evaluate our products and solicit their frank feedback from groups with shared interests.

50% of Rage Coffee's operations are conducted offline and 50% online. The online operations can be further divided into direct website sales, which account for 75% of the total numbers, and sales from social commerce, hyper-local apps, and marketplaces, which account for a quarter of sales. The chatbot is here. The user's journey is made easier, clearer, and more convenient by direct interactions on social commerce and chats. Customers can skip the browsing and searching in the product catalogs and head straight to the checkout page by selecting a few options.

Nothing compares to window shopping while relaxing in your home and thinking about purchasing. Since the COVID19 pandemic has forced us to embrace technology and the indoors, this has perhaps come to be considered the norm. Brands were quick to react, adjusting to the change and meeting the demand, and now we are in a completely new era of commerce.