Social commerce emerges as major channel for D2C beauty brands

Bombay Shaving Company and The Man Company, both of which retail male grooming products, say that social commerce sites like BulBul TV, Simsim, Roposo and Trell contribute about 8-to-15 percent of their business every month.

“Going forward, we aim to continue working closely with the platforms to educate new audiences about our offerings and hope to increase the total share of business to 20 percent soon,” said Deepak Gupta, chief operating officer at Bombay Shaving Company.

Social commerce sites are emerging as a major sales avenue for direct-to-consumer (D2C) brands in the beauty and personal products business that derive most of their sales from e-commerce marketplaces and their own websites, apps and online stores.

Social media companies such as Facebook (now Meta) and Instagram enabled e-commerce on their platforms a while ago. But D2C brands have been able to reach out to a new set of users with the arrival of dedicated platforms. According to a recent report by management consulting firm RedSeer, social and video commerce opens up a potential $250 billion opportunity to digital-first brands by 2030.

“These non-traditional marketplaces enable digital-first brands to reach out to a new cohort of consumers. We foresee these channels would contribute about 20-25 percent sales of D2C brands in the next three-four years,” said Mrigank Gutgutia, associate partner at RedSeer.

Small-town India

A white paper by retail consulting firm Technopak pegs the D2C market at $22 billion by financial year 2025. The paper says it will contribute more than 10 percent of the total home, accessories and fast moving consumer goods (FMCG) market in India. The report estimates that India has 600 D2C businesses and the market is worth about $1.9 billion currently.

With the emergence of these platforms, the companies are reaching out to the emerging set of Internet users, who are primarily from the smaller towns of the country.

“These platforms are well penetrated into Tier II, Tier III cities and hence help build a wider reach to relevant audience,” said Gupta of Bombay Shaving Company.

A report by RedSeer last year estimated that about 20 percent of shoppers on social commerce platforms were from metro cities, 25 percent from Tier I cities and 55 percent from Tier II cities and beyond. According to the company’s estimates, social commerce will have 300-500 million users by the end of this decade.

Voice-based interface

“These platforms are enabling brands to reach out to customers who want to shop online but are not comfortable with e-commerce platforms or marketplaces,” added Gutgutia.

“This new set of consumers prefers a video-based interface rather than static product shots. This is especially true for high engagement categories like beauty and fashion,” he added.

According to a Bain & Co report released in 2020, out of 572 million internet users in India, only 160-190 million shop online. The key reason cited by consumers for their reluctance to transact online was a lack of trust in finding the right products.

Social commerce platforms are trying to solve these problems by roping in influencers and making videos of products.

Built to shop

D2C brands in beauty and personal care segment have realized that the video medium not only engages consumers but also educates them and are tying up with influencers on these platforms to sell their products.

“Social commerce bridges the gap between brands and customers and thereby strengthens credibility, unlike e-commerce platforms where the trust factor is considered a major hindrance,” said Hitesh Dhingra, founder of The Man Company.

“In addition, video-generated content is picked up instantly on social commerce platforms, especially, by Gen Z and millennial clientele. This enables brands to reach a wider captive audience,” he added.

D2C brands also find it more organic to sell on these platforms. According to Shankar Prasad, founder and CEO at Plum, a lot of content on these platforms is produced by creators that brands would not have been able to produce on their own.

“Secondly, feedback about the product from both the influencer and customers is rich and real-time,” he added.

According to experts, social commerce also scores over social media as these platforms have been built to encourage and facilitate interaction.

“Some of these channels have made its seamless for users to transact after being educated about a product by placing purchase links right next to the video or blog. This significantly increases the ease of purchase,” said Gupta of Bombay Shaving Company.