Riding on its recent Alibaba partnership, Paytm is now planning to bring as many as 100,000 sellers from China-based Alibaba’s online shopping offshoot AliExpress, to start retailing on its platform in India from August. And while you may consider it a Paytm expansion plan, but going by the looks of it, its more of a grand Alibaba India Debut.
This means that if you fancy Chinese products (which you do, and which is the reason why India has a mammothic trade deficit with China), you can now purchase them online from India itself. This rather unexpected move will help Paytm almost double its current Gross Merchandise Value figures in 6 months.
Amit Lakhotia, vice president-payments at Paytm said-
According to our initial estimates, we’ll be able to double our gross merchandise within six months with the help of AliExpress integration.
Paytm crossed $1.5 billion (about Rs 9,600 crore) in gross merchandise value during the year till April end. Now it expects an additional $1.5 billion from AliExpress business alone in the next six months. This also means a straight forward challenge to other Indian e-commerce giants that have been in this field for years. For the sake of comparison, Flipkart has a GMV of $4 Billion (with a bubbled up valuation of over $15 Billion), followed closely by Snapdeal with a $3 Billion valuation.
Alibaba holds a 25 percent stake worth $650 million (about ₹4,160 crore) in One97 Communications through Ant Financials, the parent company of Paytm. Alibaba has been eyeing to expand its business to foreign lands since long. With this recent step, Alibaba intends to grope in as much as $6 billion (₹38,400 crore) of Indian e-commerce market.
Lakhotia said –
We are undergoing quite a complex integration with AliExpress, something we haven’t done in the past. We are looking at various aspects such as legal and taxation issues, international logistics, customs, the process for issuing payouts to merchants and for refunds.
Once done, customers will have an option to pay cash on delivery for all products they buy from Chinese merchants. From a customer perspective, there’ll be no difference between an Indian and a Chinese merchant. Paytm would be handling all the issues as they have been doing in case of an Indian seller.
Paytm currently has 40,000 sellers in India. However, only 10,000 of them transact on a monthly basis. Now that it is bringing in 1,00,000 sellers from China, it will need to evolve its infrastructure, which will be done by the $650 million that Alibaba earlier invested. And no matter how much you ignore it, this expansion looks like Alibaba’s strategy of getting into Indian market using Paytm’s infra and reach.
While Paytm has chosen to expand its business by partnering with Alibaba, other major Indian giants in this space namely Snapdeal and Flipkart, are looking to make numerous appropriate acquisitions, eventually leading to an inorganic growth. Snapdeal aims to become profitable in next 2 years once its investments and acquisitions start to bear fruit.