How Social Commerce Platforms Are Tapping Into India’s Hinterlands With Micro & Nano Creators

Consumer behaviour in India is undergoing a gradual change. Consumption patterns are evolving. Indian consumers are asserting their individuality and ownership over how they live, work and express their creativity. Rather than following or getting influenced by paid advertisements, they want to follow people they can relate to. Consumers today want to purchase and consume products that suit their personalities. This is the primary cause of this paradigm shift and the rise of content-driven commerce or social commerce.

Content-Driven Or Social Commerce

Social commerce has shifted the balance of power from large corporations and brands to content creators and D2C brands. While the Indian ecommerce market is estimated to grow at a steady pace to about $400 Bn by 2030 at an estimated CAGR of 18.9%, the social commerce market is expected to grow to hit $70 Bn by 2030. There are various factors contributing to this fast-paced growth. 

With more than 834 Mn internet subscribers, 931 Mn smartphone users and a 61% internet penetration rate, India has a lot going to facilitate the new age of consumer behaviour.

Is This Growth Sustainable?

Users now have reduced attention spans and look for instant gratification with short-form content leading to the rise of micro and nano content creators. There is a latent desire to form close-knit and strong communities. There is also a greater emphasis on original content and users prefer discovering this content on their own rather than being fed curated content. This has helped build trust between creators and their communities and is a huge factor that drives social commerce. 

Buyers look for authentic and relatable content from creators they can identify with, and trust for their expertise. On the other hand, ecommerce and social media content require a lot of money to grow and scale. Considering the number of SKUs on an ecommerce platform, the cost of content creation is very high. The cost of creating video content can range anywhere from INR 1K to INR 100K. 

Simply put, this means the higher the number of SKUs a platform has, the higher the cost of creating content. This can potentially be a huge cost for social commerce players, leading to high burn rates. 

The Social Commerce Approach

Leading social commerce platforms that bring aspirational brands to small towns of India through a content-driven approach are setting new benchmarks in organic and sustainable growth.  This growth is sustainable because the cost of content creation, arguably one of the biggest cost centres in the space, is very low. How did this happen? 

The answer lies in relying on user-generated content. A major chunk of their revenue is from the micro and nano influencers based out of Tier II, III and IV cities. These short video content creators have their own set of loyal followers. When they create brand tagged content, their community of followers watch and buy the products by clicking on the tags. Each creator earns money for every transaction that originates from the video content on the platform. The cost, therefore, is indirect and is aligned to their earnings.

Another factor that has worked in their favour is — organic user acquisition. Their user acquisition cost has always been low as they were acquired organically, without spending huge sums on advertisements. They rely on referrals and the content creators and buyers become their ambassadors and advocates. 

Social commerce businesses are driving growth for their venture with healthy unit economics to maintain quality and consistency. In a world of ecommerce startups that are burning cash at an alarmingly high rate, these firms have shown remarkable restraint. They have managed to keep their eye on the fundamentals, tightly reining in costs and maintaining optimum business metrics, leading to organic and sustainable growth. This has made the social commerce space definitely worth watching out for.