E Commerce and Social Commerce
E-commerce has transformed the way business is done in India. The Indian E-commerce market is expected to grow to US$ 200 billion by 2026. Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. As of September 2020, the number of internet connections in India significantly increased to 776.45 million, driven by the ‘Digital India’ programme. Out of the total internet connections, ~61% connections were in urban areas, of which 97% connections were wireless.
E-commerce transactions where buyers and sellers interact social media platform with each other before concluding a purchase is called as ‘social commerce’. In conventional e-commerce, buyers browse through a digital catalogue, whereas in social commerce, buyers and sellers complete their transactions/purchases through their social media accounts by interacting on various social media platforms (such as Instagram, Facebook and Pinterest).
According to a Bain & Company report, social commerce in India (in terms of gross merchandise value) was estimated at ~ US$ 2 billion in 2020 and is projected to reach US$ 16-20 billion by 2025 and US$ 60-70 billion by 2030. Share of social commerce in India’s e-commerce market (US$ 38 billion in 2020) is expected to increase from the existing 1-2% to 4-5% of the projected US$ 140 billion market by 2025.
Growth Drivers
Increasing preference for online shopping
E-commerce sector recorded growth as most consumers shifted to online shopping as opposed to stepping outside due to lockdown restrictions. The number of online shoppers in India is expected to reach >250 million by 2022, according to RedSeer. Owing to a high level of social media engagement among people, social commerce is expected to play a significant role in expanding e-commerce.
Massive Capital Infusion
The industry is witnessing increasing investments from key global players. For example, in 2020, Facebook invested Rs. 43,574 crore (US$ 5.7 billion) in Reliance Jio and Google put in US$ 4.5 billion in Jio Platforms.
2020 also witnessed significant developments of the domestic players. For example, the acquisition of Future Group by Reliance Retail to expand Ambani Group’s presence in the e-commerce space. In January 2021, Udaan, a B2B e-commerce platform, raised US$ 280 million (~Rs. 2,048 crore) in additional financing from new investors—Octahedron Capital and Moonstone Capital. Many D2C Brands have become household name nowadays.
Widening social media influence
E-commerce is becoming the next-gen tool for Indian manufactures, with ~28% millennials buying products sparked by social media endorsements and while the remaining regularly track brands / trends on social media platforms to stay updated on brands and products.
Evolving business models such as reselling and group buying
In addition to social media-led product discovery, business models such as reselling and group buying have also evolved in this space.
For example, Meesho, India-based social commerce platform, follows a reselling model, wherein suppliers list their product catalogue on the app and individual entrepreneurs/businesses connect with them via Facebook and WhatsApp for relevant purchases. In India, >50,000 suppliers and 8 million entrepreneurs run and manage their businesses using Meesho.
DealShare, a social e-commerce start-up based in Jaipur, sources wholesale goods from local producers and sells them to customers through the DealShare App. The company also offers deals/discounts on its WhatsApp group and each time, users refer/share items to their friends and relatives, they get discounts. It supports >10,000 small businesses.
E-commerce sector recorded growth as most consumers shifted to online shopping as opposed to stepping outside due to lockdown restrictions. The number of online shoppers in India is expected to reach >250 million by 2022, according to RedSeer. Owing to a high level of social media engagement among people, social commerce is expected to play a significant role in expanding e-commerce.
Massive Capital Infusion
The industry is witnessing increasing investments from key global players. For example, in 2020, Facebook invested Rs. 43,574 crore (US$ 5.7 billion) in Reliance Jio and Google put in US$ 4.5 billion in Jio Platforms.
2020 also witnessed significant developments of the domestic players. For example, the acquisition of Future Group by Reliance Retail to expand Ambani Group’s presence in the e-commerce space. In January 2021, Udaan, a B2B e-commerce platform, raised US$ 280 million (~Rs. 2,048 crore) in additional financing from new investors—Octahedron Capital and Moonstone Capital. Many D2C Brands have become household name nowadays.
Widening social media influence
E-commerce is becoming the next-gen tool for Indian manufactures, with ~28% millennials buying products sparked by social media endorsements and while the remaining regularly track brands / trends on social media platforms to stay updated on brands and products.
Evolving business models such as reselling and group buying
In addition to social media-led product discovery, business models such as reselling and group buying have also evolved in this space.
For example, Meesho, India-based social commerce platform, follows a reselling model, wherein suppliers list their product catalogue on the app and individual entrepreneurs/businesses connect with them via Facebook and WhatsApp for relevant purchases. In India, >50,000 suppliers and 8 million entrepreneurs run and manage their businesses using Meesho.
DealShare, a social e-commerce start-up based in Jaipur, sources wholesale goods from local producers and sells them to customers through the DealShare App. The company also offers deals/discounts on its WhatsApp group and each time, users refer/share items to their friends and relatives, they get discounts. It supports >10,000 small businesses.
Policy Initiatives (1/2)
Some of the major initiatives taken by the Government to promote E-commerce in India are as follows:
- As of February 15, 2020, the Government eMarketplace (GeM), listed 1,071,747 sellers and service providers across over 13,899 product and 176 service categories. For the financial year 2020-21, government procurement from micro and small enterprises was worth Rs. 23,424 crore (US$ 3.2 billion).
- In a bid to systematise the onboarding process of retailers on e-commerce platforms, the Department for Promotion of Industry and Internal Trade (DPIIT) is reportedly planning to utilise the Open Network for Digital Commerce (ONDC) to set protocols for cataloguing, vendor discovery and price discovery. The department aims to provide equal opportunities to all marketplace players to make optimum use of the e-commerce ecosystem in the larger interest of the country and its citizen.
- National Retail Policy: The government had identified five areas in its proposed national retail policy—ease of doing business, rationalisation of the licence process, digitisation of retail, focus on reforms and an open network for digital commerce—stating that offline retail and e-commerce need to be administered in an integral manner.
- The Consumer Protection (e-commerce) Rules 2020 notified by the Consumer Affairs Ministry in July directed e-commerce companies to display the country of origin alongside the product listings. In addition, the companies will also have to reveal parameters that go behind determining product listings on their platforms.
Policy Initiatives (2/2)
- Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October 2019.
- Under the Digital India movement, Government launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM) etc. to boost digitisation.
- In October 2020, Minister of Commerce and Industry, Mr. Piyush Goyal invited start-ups to register at public procurement portal, GeM, and offer goods and services to government organisations and PSUs.
- In October 2020, amending the equalisation levy rules of 2016, the government mandated foreign companies operating e-commerce platforms in India to have permanent account numbers (PAN). It imposed a 2% tax in the FY21 budget on the sale of goods or delivery of services through a non-resident ecommerce operator.
- In order to increase the participation of foreign players in E-commerce, Indian Government hiked the limit of FDI in E-commerce marketplace model to up to 100% (in B2B models).
- Heavy investment made by the Government in rolling out fiber network for 5G will help boost E-commerce in India.
Section - 5
We have reimagined the ways how the process of new age policy making would be.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Section -6
India remains a complex market. It is best to view India not as a single market, but as a series of interconnected regional markets where the regulatory and investment climate changes from one state to another.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Section -7
Many companies have attained stepladder growth by identifying the winds of change in policies, which sometimes open up new business models. Those companies are also able set the agenda for future industry reforms through sustained dialogues.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
Section -8
The ripple effects of a tumultuous 2020 are likely to be even more enduring and impactful than the forces that initially triggered them. In the aftermath of Covid the government is determined to build the economy through incentives like PLI schemes to boost domestic manufacturing, amending FDI regulations, setting aside startup funds, accelerating digital transformation, building infrastructure and going ahead with its ambitious disinvestment and asset monetization plans.
All of this would entail administrations pulling regulatory and legislative levers to implement its priorities. We are here to help your business along with implications for how to respond to shifts. Numerous companies and hyper growth startups have been a beneficiary of our advocacies and interventions.
All of this would entail administrations pulling regulatory and legislative levers to implement its priorities. We are here to help your business along with implications for how to respond to shifts. Numerous companies and hyper growth startups have been a beneficiary of our advocacies and interventions.
Section - 9
We have reimagined the ways how the process of new age policy making would be.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Section -10
India remains a complex market. It is best to view India not as a single market, but as a series of interconnected regional markets where the regulatory and investment climate changes from one state to another.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
