While India’s biggest unicorn are obviously eCommerce brands, none of them have turned profitable yet. Most of them are trying to increase their gross sales number, with the likes of Flipkart speculated to go public. PayTM though, has different plans.
In an interview with ET, Vijay Shekhar Sharma, CEO and founder of PayTM, said,
We definitely want to be the first one to achieve break-even. We are aggressive about growth and far more about break-even and that’s why we have an asset-light model on marketplace.
Our target to turn profitable by 2017 seems achievable. Next year, we should be able to achieve breakeven. Before we do that, our net contribution margins have to breakeven when the discounts are taken off from the merchants and consumers
Most of the Indian eCommerce players, including Flipkart and Snapdeal, have been chasing growth of gross merchandise value, or gross sales, by offering heavy discounts by giving up margins. However, the companies have now pulled back and are reducing discounts and increasing the minimum transaction value for free shipping.
To turn profitable, Paytm has probably asked its data science team to identify products that can add to margins, without turning away buyers who are sensitive about the pricing related to particular category. It is also planning to charge sellers, enabling payments and creating a cloud platform for logistics players who service the sellers on Paytm.
PayTM was founded in 2010 by Vijay Shekhar Sharma as a mobile recharge and utility bill payments platform. But today, it has become a full fledged marketplace for sellers and consumers with its own RBI-approved payment wallet. It is the largest mobile commerce platform in India with over 20 million registered users and more than 15 million orders per month.