Food delivery major Swiggy may become the latest high-profile company to enter India’s burgeoning social commerce space, intensifying competition in the already crowded market.
The Bengaluru-based unicorn plans to launch Swiggy Bazaar—a social commerce business focused on grocery, FMCG, and fresh farm produce—over the next couple of months, a source-based report by local media Entrackr said on Tuesday.
Swiggy is likely to “bring a group-buying element and leverage the reseller model in Swiggy Bazaar,” the report stated. The company has ramped up hiring for the new vertical and is looking to double the size of its current team of 10-15 people.
In the first phase of building out its social commerce business, the food delivery giant will invest USD 15-20 million. To begin with, the company will launch a pilot in its key markets like Bengaluru and Gurugram. In the long term, Swiggy Bazaar may also explore segments such as lifestyle and fashion, the report added.
The move is in line with Swiggy’s focus on diversifying its business. The company, which has so far raised USD 3.7 billion in venture capital from marquee investors including SoftBank, Prosus Ventures, Falcon Edge, and DST Global, has expanded its footprint into grocery delivery and hyperlocal services over the past two and a half years.
The development comes three months after Walmart-owned homegrown e-commerce giant Flipkart forayed into the social commerce space by rolling out a separate platform called Shopsy. The company recently said Shopsy has already amassed 250,000 sellers and 5.1 million users. Similarly, Google-owned online video sharing platform YouTube also ventured into the segment in July after signing a definitive agreement to acquire local social commerce startup simsim to enable viewers to buy products from Indian retailers.
Aside from Shopsy and simsim, Swiggy Bazaar will face tough competition from incumbents like SoftBank-backed Meesho, InMobi-owned Shop101, Korea Investment Partners-backed GlowRoad, and Tiger Global-backed DealShare, among many others.
Indian social commerce has been growing rapidly on the back of massive digital adoption in the country due to the healthcare crisis. Since the COVID-19 pandemic hit India early last year, 30–35 million new customers began transacting online, taking the total number of online shoppers to 140 million by the end of March 2021, according to a report by Bain & Company and Flipkart. This count is the third highest globally, behind China and the US. Still, less than 25% of India’s 625–675 million internet users make purchases over the internet, which means the market remains massively untapped.
The country’s social commerce gross merchandise value (GMV) is expected to increase from USD 1.5–2 billion in FY 2020 to USD 16–20 billion in FY 2025. GMV implies the total monetary value of products sold through online channels.
“Peer and community influence will play a much more significant role for the next wave of online shoppers. Social commerce GMV could grow at a 55–60% compound annual growth rate over FY20–25, with the potential to empower 40 million small businesses and turbocharge women entrepreneurs,” said researchers from Bain & Company in the report. They added that growth in the segment will further democratize e-retail, with 60% of social shoppers coming from smaller towns.