January 4, 2016
If you wanted to see a great example of connected commerce where payments is just an end-point, this story is for you. Vijay Shekhar Sharma, Founder & CEO of One97 Communications, which owns Paytm, has kept aside $400 million for expanding its online marketplace business in India.
With the aim of online marketplace expansion, Paytm plans to bring 100 million stock-keeping units (SKUs) from China to India. Currently, it has around 100,000 sellers on its platform. Snapdeal, by comparison, has close to 200,000 sellers, and Flipkart has around 80,000.
For surviving in the e-commerce battle, Paytm plans to push China-to-India commerce. Paytm will rely on Alibaba and other Chinese companies for their product portfolio.
With an investment of $680 million, Alibaba Group is the largest shareholder in One97 Communications. "In 2016, we will promote our online marketplace business in a big way. China-to-India commerce will be a focus area. While competition is concentrating on selling mostly smartphones, we will expand in other verticals; there is a lot we can offer to Indian consumers," Sharma said to Business Standard.
According to sources, Alibaba will be the support behind Paytm's China product portfolio. With this backing, Paytm will aim to become the biggest Indian player in so far as the number of sellers on the platform is concerned. With more than eight million sellers, Alibaba has the widest product range.
Paytm plans to take a multipronged approach to gain dominance in the market. It plans to roll out its much-awaited payments bank. It targets as many as 100 million accounts within two years of launching the bank.
Paytm—which was launched as an e-commerce website in 2010 in India, and then became India’s largest mobile payment platform—recently announced a fresh round of funding of $500 million from Chinese e-commerce giant Alibaba and its finance arm, Zhejiang Ant Small & Micro Financial Services Group.
Alibaba’s funding has boosted Paytm to move into the big league of the e-marketplace segment in India. The company’s major competitors in the e-commerce marketplace are Flipkart, Snapdeal and Amazon India. Alibaba is understood to be supporting Paytm to grow exponentially from a startup into a big business, by helping it manage scale and monetize opportunities successfully and repeatedly.
It isn’t surprising that Alibaba entered into this deal with Paytm. Paytm’s mobile wallet has over 120 million users in India. It processes 75 million transactions every month. On the other hand, China’s biggest e-commerce platform, Alibaba wants to expand its services globally and wants more local merchants around the world to use Alibaba to sell their products and services. This deal is a great way for Alibaba to tap into the Indian e-commerce market.
In India, the m-commerce sector is currently on fire with four companies (e-commerce) leading the game. Four unicorn companies—Flipkart, Snapdeal, Amazon and Paytm have armed themselves with billions in funds from renowned investors. Flipkart tried the mobile app-only model with Myntra and might be retreating from that move. But Paytm, with its beginnings as a mobile payments tool, has a unique position. It's probably the best-placed as a mobile commerce platform. Most people, including me, have always used Paytm as a mobile wallet and now use it to buy online on phone. The commerce and payments functionality goes hand in hand. Something Snapdeal is trying to replicate after buying Freecharge.
With its relationship with Alibaba, Paytm is differentiating itself from other players in the same field. The company's main play in e-retail is as a mobile payments platform, but Paytm's role is changing with the expansion of its online marketplace.