How the Rise of Social Commerce enabled Facebook to make Investments in the Indian Startup, Meesho

Seeing the growth of social commerce, Facebook has made its first-ever investment, besides acquisition in 2017, in an Indian company, Meesho.
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

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  • Jun 14,2019
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  • 12 Mins Read

At the onset of the 21st century, the wave of e-commerce was initiated in the Indian economy. At first, IRCTC introduced online ticket booking services which helped people to purchase railway tickets virtually. This business model was massively employed by entrepreneurs but the e-commerce platform, Flipkart, created a significant mark in the space. This, in turn, gave rise to various e-commerce platforms such as Snapdeal, Shopclues and most importantly, Amazon.

After this trend, another wave has surged in the retailing industry, which is social commerce. It acts as a boon for social media platforms as well as small sellers. According to the social commerce report of Business Insider, “The top 500 retailers earned $6.5 billion from social shopping in 2017, up 24 per cent on the year before.”

Seeing the growth of social commerce, Facebook has made its first ever investment, besides the acquisition in 2017,  in an Indian company, Meesho. The Indian tech company practices social commerce and expands online communities like any other social networking sites.

How Does Social Commerce Create an Impact?

Basically, social commerce is a blend of social media and e-commerce wherein sellers can sell their products by targeting social media users. The tech company Meesho uses a similar approach and brings sellers, as well as customers, closer.

The company follows a unique business strategy as it focuses on two types of sellers—housewives and students, rather than approaching concrete business enterprises. Owing to which, it gained a lot of traction in its four-year course.

“We share a common goal with Facebook—to enable community and help small businesses grow. This commitment from Facebook will help us leapfrog towards our goal,” co-founder and CEO of Meesho, Aatrey said in the statement, as reported by daily news, Quartz.

Another thing that has made Meesho a potential company is its focus on housewives and students as its primary users. The platform helps to reinforce women entrepreneurship exponentially and thus, it is able to grab the attention of Facebook.

“We love that the company is translating the power of online communities to expand economic opportunity for all of India, and especially women,” Vice President and MD of Facebook, Ajit Mohan, said in a statement, according to a media report. However, Facebook has not disclosed the amount yet.

Social Commerce Facilitates in Attracting Users to Social Media Sites

Over the years, the e-commerce sector has grown rapidly, in turn, giving rise to new e-commerce platforms. Given the popularity of e-commerce platforms, foreign investors such as Walmart and Softbank are betting on Indian firms.

However, large chunks of investment cannot beget an increase in online buyers.

According to a research conducted by Google and Venture Fund, Omidyar Network, “Here’s the 50 million conundrum for India’s e-commerce — regular online shoppers in India are around 50 million, but almost the same number of Indians have stopped online shopping in the last 12 months.”

When this downfall in online buyers was happening, an inverse scenario was taking place in virtual platforms. The count of social media users was increasing massively.

According to Statista’s survey, “ India has the largest number of Facebook users with 260 million in 2019.”

In this regard, the investment of Facebook in a homegrown company, Meesho is a strategic move. After participating in the Indian market, the social networking site will be creating an impact on the users and strengthening its presence.

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