Good morning [%first_name |Dear Reader%],

There are several parts of India’s internet economy that leave you scratching your head, despite their supposedly mouth-watering prospects. 

Chief among them is social commerce, at least for me. 

Nine months after Walmart-owned e-commerce giant Flipkart entered the social commerce space with the launch of Shopsy, rival Amazon has followed suit. On Friday, TechCrunch reported that Amazon bought Accel-backed Indian social commerce startup GlowRoad for an undisclosed sum. Glowroad was last valued at US$75 million in late 2020. 

Even if Amazon paid a big premium on that price tag, it would still be chump change for the behemoth. But why is Amazon interested in social commerce in the first place? 

Especially when the startup that is synonymous with the business in India—Meesho—can hardly be called a social commerce company anymore. 

Meesho, Amazon, and the conflicting signals in social commerce

If you aren’t familiar with social commerce, it can refer to one of these: 

1. Brands selling directly to consumers on social media platforms such as Instagram and Facebook, or via video shopping apps such as Bulbul
2. People signing up to be resellers on a social commerce website, such as Meesho, and circulating a curated catalogue among their friends and neighbours—mostly via WhatsApp. These resellers earn commissions on purchases made by people in their network.

The gross merchandise value (GMV) of India’s social commerce sector was pegged at US$1.5-2 billion in 2020, and is expected to surge to US$16-20 billion by 2025. And 80% of the business of social commerce companies is said to come from outside the top metros, compared to 60% for the likes of Amazon and Flipkart. 

There’s also a bunch of articles about how social commerce companies are making entrepreneurs out of millions of women, who are said to account for three-quarters of resellers.   

Tapping a massive market while also empowering women? There couldn’t be a better story. 

Pitch deck? Check. 

Press release? Check. 

This is precisely why Meesho’s evolution is puzzling. The Meta Platforms- and SoftBank-backed social commerce startup has raised over US$1 billion since its founding in 2015, and was last valued at US$4.9 billion last year. 

But the mood at Meesho now can’t be too upbeat. It is said to have to let go of 150 people from its grocery business, which was rolled out at the start of the lockdown in 2020.