A regional social commerce company, DealShare, raised around $8 Mn in its Series A round of funding led by Matrix Partners India and Falcon Edge Capital. The round also saw participation from partners of DST Global, and Omidyar Network India. The startup commenced operations in September last year and focuses on middle and lower income population belonging to non-metro, Tier 2 and Tier 3 cities.
The company, which is currently serving customers in Rajasthan and Gujarat, said it plans to expand into 100 cities across more than 10 states in the next one year. The fresh funds will be also utilized for developing artificial intelligence-based solutions and indigenous logistics network.
DealShare was founded by Vineet Rao, Sourjyendu Medda, Sankar Bora, Rishav Dev and Rajat Shikhar in September 2018. The Jaipur-headquartered startup sells grocery and household essential products through social media and messenger platforms like WhatsApp. Social commerce involves the use of social networks to send traffic to ecommerce sites and, ultimately, drive purchases.
“Majority of our customers have got introduced to ecommerce through DealShare. WhatsApp was the only application they were using regularly before DealShare. We focus heavily on simplified user interface, local language, social virality and local supplies,” Sourjyendu Medda, chief business officer at DealShare said.
The New Ecommerce Model In Town
DealShare rewards a user based on the number of times shares a deal with friends and family who eventually buy it. The more people a user can nudge to buy, the higher his or her rewards. Its motto is “Buy more, save more and buy with friends and save even more”
“90% of our customer base comes from either word of mouth or sharing links on social media,” one of the cofounders, Sourjyendu Medda told Inc42.
Our customer acquisition costs is less than one-tenth of classical ecommerce – Sourjyendu Medda, cofounder Dealshare
Companies like DealShare, and WMall, and Bulbul along with much larger players like Meesho and Glowroad are targeting customers in smaller cities and towns, who are not yet comfortable with shopping on websites like Amazon and Flipkart. By using vernacular languages and making shopping social, these companies are looking to offer discounts through bulk buying.
“Indian consumers living in Tier 2 and below cities have long been missing out on the negotiating ability it possesses attributing to the huge population, due to lack of tools for collective buying. DealShare solves this unique problem through its app where users are able to consolidate the buying requirement among their friends and relatives and place orders on the app,” Vineet Rao, CEO and head of technology said.
Product categories on platforms like DealShare usually have unbranded apparel, household products, FMCG beauty products, unlike Amazon or Flipkart which categorize smartphones, electric appliances and exclusive fashion deals.
Navroz D. Udwadia, cofounder and partner of Falcon Edge said: “DealShare brings together a focused assortment that is differentially procured. This, when coupled with the delight of discovery and a gamified shopping experience, drives robust repeat usage and cohort behavior.”
Social Commerce is seeing a sudden pickup in interest from investors in 2019. India’s biggest player Meesho recently closed a $125 Mn funding round led by Naspers, with participation from Facebook and existing investors SAIF, Sequoia, Shunwei Capital, RPS and Venture Highway.
The social commerce category where DealShare, Meesho, Glowroad and Shop101 operate is expected to grow multifold in India with its tightly-knit social network and large extended families. According to Statista, over 2.14 Bn people worldwide are expected to buy goods and services online by 2021. Further, social platforms having a large user base like WhatsApp (400 Mn), Facebook (241 Mn) and Instagram (72 Mn) will act as a potential catalyst to fuel this growth.