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Paytm aims to be India’s Taobao; unveils a zero-commission app for sellers

The Mobile
payment platform Paytm has recently made strategic moves to become a strong
contender in the Indian e-commerce space.

Paytm has launched two new applications, a zero-commission
Seller’s app that allows users to transfer money between them and a platform
for small and medium-scale enterprises as well as individuals to display their
products. It won’t charge any commission for the listing, making money instead on commissions
levied when they transfer money earned out of the site. 

The Mobile
payment platform Paytm has recently made strategic moves to become a strong
contender in the Indian e-commerce space.

Paytm has launched two new applications, a zero-commission
Seller’s app that allows users to transfer money between them and a platform
for small and medium-scale enterprises as well as individuals to display their
products. It won’t charge any commission for the listing, making money instead on commissions
levied when they transfer money earned out of the site. 

The company said this push, in addition to
its existing general e-commerce platform, would help marketplace operations
make up half of its total revenue target of $4 billion by the end of 2015.

“Everyone is moving to mobile now, but that
is what we started with,” said Vijay Shekhar Sharma, Founder and Chief Executive
of Paytm’s owner, One97 Communications. “We see opportunity in enabling
payments in everyday use cases.” 

The company, in which Alibaba’s finance arm
Ant Financial holds a 25% stake, intends to become India’s version of Tao Bao,
China’s largest marketplace operated by the Alibaba Group.

As the history
goes, Taobao Marketplace was launched in May 2003 by Alibaba after eBay
acquired Eachnet, China’s online auction leader at the time, to became a major
player in the Chinese consumer e-commerce market. To counter eBay’s
expansion, Taobao offered free listings to sellers and introduced website
features designed to act in local consumers’ best interests, such as instant messaging
for facilitating buyer-seller communication and an escrow-based payment tool,
Alipay. And as a result, Taobao became mainland China’s undisputed market
leader within two years. Its market share surged from 8% to 59% between 2003
and 2005, while eBay China plunged from 79% to 36%. Eventually, eBay shut down
its China site in 2006, while Taobao continued to grow and in 2011 was split
into: Taobao Marketplace (a C2C platform), Tmall.com (a B2C platform; then
called Taobao Mall), and eTao (a search engine for online shopping).

Ant Financial’s chief operating officer, Eric
Jing, said that it is sharing its industry and technical learning from China
with Paytm to strengthen its presence in India. The company will compete with
Flipkart, Snapdeal and Amazon in the marketplace arena. 

The company’s
main focus right now is on getting more users. Echoing this sentiment, Jing of
Alipay added, “We don’t care about profitability. We care about SMEs, users on
the Paytm wallet.”

Paytm, which started off as a mobile recharge
provider, added deals, wallet and marketplace on its app over the past year. It
has also tied up with taxi-hailing app Uber to become the company’s default
mobile payment system and has also applied for a payments bank license. 

The company, which is yet to turn
profitable, is planning to spend more than Rs 500 crore on marketing by December
2015. The Paytm Wallet app, which has over 100,000 downloads on Google Play,
allows money transfers within Paytm wallets and consumers can also transfer
money in the wallet to a bank account, for cashing out. 

A user can make monthly transactions of up
to Rs 1 lakh, subject to banking-related authentication conditions. “We
have about 66 million wallets, which we want to take to 100 million by the year
end,” Sharma said. “We’re doing 1 million money transfers a day on
the beta version of the wallet app.” 

The new seller app will allow small and
medium-scale companies, or even individual entrepreneurs, to display their
catalogue on Paytm, and manage their inventory and orders on the fly. Paytm
will not charge any commission from these merchants. Other marketplaces usually
take a 10-15% commission.

Paytm expects that the number of sellers or
merchants on board will rise to 100,000 by the end of the year from about
33,000 at present. Sharma added,
“We have 33,000 sellers and we expect this to touch one lakh by year-end.
They can list their products in simple steps and customers can also communicate
with the seller through chat that is built into the platform.” Currently, the company claims to have 8.5 million SKUs on
its apps and aims to sell 100 million SKUs by the end of this year.

According to Sharma, after crossing the 100 million user
mark by the end of this year, the company’s next target would be 500 million
wallets. At present, it has 66 million wallets.

 

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