In line with our earlier reports, Paytm is considering to spin-off its marketplace in November this year. With this move, the company will help Chinese e-commerce behemoth and its primary investor Alibaba establish its presence in one of the largest and highly competitive e-commerce market in the world.
A couple of months ago, Paytm parent One97 Communications had registered a new entity for the online retail business, named Paytm E-Commerce Pvt. Ltd. In line with the same, a source who is aware of this matter, told ETTech,
The contours of the spinoff, paperwork and board members are being finalised and the official launch is planned in November.
Before spinning off its retail business into a new entity, Paytm has planned its own three-day festival sale starting from October 12. One of the key selling point during the sale will be cashback offers, totaling over Rs. 100 crore by merchants on its platform. The sale will focus on customers in smaller towns and cities. The company is also focusing on categories including kitchen, fashion and home furnishings, instead of consumer electronics.
Saurabh Vashishtha, the VP for business and product management of Paytm’s e-commerce marketplace, said,
We expect 10 million transactions in three days. This year we have lined up total benefits of more than Rs 1,000 crore including cashbacks and discounts on three days of the Maha Bazar Sale.
Once the spin-off process is completed, the e-commerce entity will be able to independently raise money from investors. Earlier report suggested that the company has already started talks with existing investors to infuse fresh capital in the new entity.
The Alibaba group is present in India through Paytm and Snapdeal, and a direct entry for the Chinese e-commerce group is expected to heighten competition. This could also result in a shakeout in the industry.
China’s Alibaba Group, holds around 41% stake in One97 Communications, together with its payments arm Alipay and Ant Services. The Chinese e-commerce giant has aggressive plans to build a presence in the Indian market and has reportedly started to build its team in India.
Currently, the Indian e-commerce market is being dominated by Flipkart and Alibaba. While Flipkart went through rough times earlier this year with number of valuation markdowns, the recent Big Billion Day sale has provided the much needed boost to the company. It is now also in early talks with Wal-Mart for a reported $1 billion infusion in exchange of a minority stake in the company.
On the other hand, Amazon is coming up with new services to get hold of a majority market share in the country. After launching Amazon Prime in India, the company is now gearing up to launch its Prime Video service, which is reportedly launching in November 9.