Investors proactively investing in social e-commerce startups to target new users: Report

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With an increasing number of new internet users in India commencing to transact online, the investors are proactively investing their money into the social e-commerce startups that enable users to leverage their social network to buy and sell products, cited Mint.

While, as per the data collected by Venture Intelligence, the social e-commerce startups have bagged $157 million from venture investors in 2019, nearly double the financial secured in 2018.

“Online retail has single-digit per cent penetration in India and, therefore, has massive headroom for growth, especially for categories such as grocery and home goods,” said Gourav Bhattacharya, director, Matrix Partners India.

“E-commerce and social commerce are not necessarily different. The recent ‘social’ commerce companies are creating a new distribution layer for certain ‘push’ or ‘impulse’ categories, but are still very much online retail. There will be significant new online penetration driven by these new distribution models and hopefully, value creation as well,” Bhattacharya added.

On the other hand, according to a report by Deloitte and Retailers’ Association of India, the retail market was expected to grow from $795 billion in 2017 to $1.2 trillion in 2021.

The report further added that the e-commerce market is also expected to reach around $84 billion in two years, led by the surging internet penetration and smartphone usage in the country.

Sajith Pai, director, Blume Ventures, said that the growth of social commerce is being driven by a surge of new internet users from small towns, who were still not well versed with the ways of traditional e-commerce.

“While there are multiple reasons why social e-commerce is attractive, it all boils down to one key factor, which is to do with getting non-traditional users to transact in a manner that is crafted for them,” added Pai.

Some of the leading and most financially infused e-commerce startup include Meesho, Shop101, GlowRoad, which are backed by giant investors such as Kalaari Capital, Accel Partners among more.

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