Investors click social commerce for e tailing

Content, community and shopping are the new buzzwords in the Indian online retail space as investors warm up to the idea of social commerce. A slew of community-based websites have hit the burgeoning e-tailing market in India, which so far has been dominated by discounts and deal sites. 

Social shopping as a digital concept builds on consumer's offline shopping experience — browsing with friends, taking their opinions on things they like, earmarking stores or products they like and talking about their purchases. 
US-based investors Matrix Partners and Lightspeed Venture recently pumped $5 million in Limeroad.com, while few angel investors bet on another community commerce website Buynbrag.com. Other players in this space are Wehelpshop.com and Klip.in. 

Investors behind India's online shopping start-ups — modeled along successful engines in the US and China — are seeking differentiators and enablers in a developing market. And bringing social shopping into the online space is beginning to appeal to an increasing set of investors. Again, some of these ventures reflect booming American start-ups like Polyvore.com. 

"Social commerce brings in the power of the viral growth as it mimics the offline world in terms of the shopping behaviour. Women will be a huge chunk of online shoppers going forward in India and this venture will cater specifically to them with a highly differentiated curated shopping platform ," Avnish Bajaj, managing director, Matrix India, said. The VC fund is a primary investor in the Silicon Valley start-up Polyvore along with Benchmark Capital, DAG Ventures, Goldman Sachs, and Vivi Nevo (NV Investments). The Indian e-commerce industry in the last one year has been in belt-tightening mode as customer acquisition costs went awry for many players even as funds were hard to come by. Marquee investors cracked down on burn rates and cost structures in their invested companies in order to streamline operations. 

Social commerce mostly operates on the marketplace platform and allows players to not take on an inventory pile, helping costs in a big way. "We will offer no heavy discounting and won't pile up inventory. Also, our model helps us have a very low return rate," says founder & CEO Suchi Mukherjee, who has had stints with eBay, Skype and Gumtree. The other co-founders are Manish Saksena, ex-COO of Tommy Hilfiger India, and Ankush Mehra, former head of supply chain at Reliance Hypermarkets. 

"Community commerce has the potential do very well. Its appeal is more to the younger, socially inclined audiences who are not always looking out for deals," says Niren Shah, managing partner, Norwest Venture Partners, which has invested in e-commerce sites such as FashionandYou.com and Pepperfry, among others. Shah says Norwest is monitoring this space closely and will invest once there is enough traction in some of the players. 

Shopping with pals 
Social shopping builds on offline experience, facilitating discussion of products, purchases & their promotion Investors expect viral growth, with women being biggest target as they are projected to form majority on the platform. Social commerce also helps industry cut down on inventories and, hence, costs too.