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Facebook taps India's smaller cities with investment in reseller

Bangalore's Meesho complements WhatsApp's payment expansion in country

Facebook has invested in in Bangalore-based reseller platform Meesho as it charges ahead with ambitions in the payment and e-commerce sphere.   © AP

NEW YORK -- Facebook has invested in Bangalore-based reselling platform Meesho as the American social media giant seeks an edge in India's online payment and e-commerce market through exposure to an untapped consumer base in smaller cities.

The deal was announced by Meesho, whose more than 15,000 suppliers can reach customers through roughly 2 million resellers throughout the subcontinent, many in less-developed areas. Terms were not disclosed.

"We share a common goal with Facebook -- to enable the community and help small businesses grow," the company said in a statement.

Facebook's investment comes as WhatsApp, the messaging service it bought in 2014, competes for a larger share in online payment and social e-commerce in India with the likes of Google and SoftBank Group-backed Paytm.

Many small businesses in India already use WhatsApp to take orders and process payments. But Meesho's reach still presents Facebook with an attractive opportunity.

"One of the reasons we like Meesho is because a lot of their coverage is outside the metros, expanding quickly to new India with a large base of resellers," Facebook India Vice President Ajit Mohan told The Times of India.

Ernst & Young sees "immense" potential in commerce outside the largest cities, predicting in its 2019 India Trendbook that "the next wave of growth will be driven by success of e-commerce and consumer internet companies" in smaller cities.

Before Facebook's investment, Meesho had reportedly raised more than $65 million from parties including American venture capital firm Sequoia and Asia-focused private equity firm SAIF Partners.

Social e-commerce, which leverages users' social connections and relationships to facilitate sales, has been a disruptive force in the neighboring market of China, with upstarts like Nasdaq-listed Pinduoduo and Yunji challenging traditional e-commerce giants Alibaba Group Holding and JD.com.

"While e-commerce brought in the first wave of online customers, it is expected that discovery-driven shopping in social commerce rather than search-based shopping will bring the next wave," EY said in the Trendbook.

"Voice and vernacular language will be important factors that will help achieve deeper penetration," it said.

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