Paytm is leveraging its partnership with the Chinese giant Alibaba to help Indian sellers. It is planning a programme that will help Indian sellers to procure products from China at cheap rates. The pilot program will include fashion accessories whereas in future it will also have categories like home decor and mobile accessories.
Paytm has identified about 25-30 merchants for the initial phase of this program. It aims to add over 10000 merchants by the end of this year giving them access to over 5 million products from China.
It also aims to empower Indian small and medium enterprises (SMEs) with financial support through tie-ups with non-banking financial companies.
Former Alibaba executive, Bhushan Patil, who joined PayTm as president is heading the initiative. Talking about it, he said,
We will facilitate the efforts of Indian merchants to scale up and become more profitable. Many Indian sellers don’t have capability to fly to China to check quality, variety and buy goods. This is where the Paytm advantage works best for them as it bridges this gap and connects them to the Chinese sellers and enable quality and efficient transactions.
He further added that PayTm will also offer bonded warehousing facilities and extra capital to these sellers.
They can use the capital to buy additional inventory to meet forecasted demand. The company will leverage its partnerships with import houses, payments network, and Citibank for the same.
Despite its core business being mobile payments, Paytm has invested heavily in its e-commerce marketplace. With about 125,000 merchants on its platform, the company currently claims to process close to two million orders per month.
It expects to reach five million by March 2017. It has particularly benefited from its partnership with Alibaba for sustaining its e-commerce segment amidst competition from Amazon, Flipkart, and Snapdeal.
There have been speculations about Paytm considering to spin off its marketplace and allow Alibaba a smooth entry into the Indian e-commerce. Alibaba has already announced to enter India independently this year.
However, Patil says that the company is focussed on scaling its B2C commerce business. And this latest move is towards the same by helping sellers source effectively and get better margins.
We expect the Indian SME’s cost to come down three times with our direct connect. Most SMEs don’t import directly, they import from local distributors, and there may be 2-3 steps shuffling, we connect directly.
He further added that if the pilot program becomes successful, Alibaba can step in to back the model further with its expertise.