Paytm Mall has initiated discussions to raise a fresh round of Rs 3,000-4,000 crore ($460-610 million), said two people aware of the development.
“Paytm Mall is planning to close the new round of funding by end of this year and is talking to financial investors from Asia and the US,” said one of the persons.
The Noida-based etailer, in which China’s Alibaba and its payments affiliate Ant Financial own a majority stake, has ambitious growth targets as it jostles for third place in a market dominated by India’s Flipkart and the US-based Amazon.
Alibaba and Paytm Mall have been scouting aggressively for acquisitions and strategic investments in the Indian e-commerce space. They could also invest in logistics, said people familiar with the thinking in the company. Paytm did not reply to email queries from ETon these developments.
ET first reported on July 11 that Paytm Mall, along with Alibaba, is in talks to invest $200 million in online grocer BigBasket.
The Bigbasket transaction is now in its final stages. The Paytm E-commerce unit had raised $200 million earlier this year from Alibaba Group and venture fund SAIF Partners.
Paytm Mall has its work cut out, with online retailers going all out to woo customers. Gross sales for the industry during the recent five-day festive offer period were approximately Rs 9,000 crore, according to market estimates. An analyst tracking the consumer retail sector said, “Paytm Mall did not go beyond 10% of this, indicating that its estimated gross sales over four days (of festive sales) did not cross Rs 900 crore.”
However, the person estimates Paytm Mall may have doubled its market share during this period, compared with the previous year, on the back of deep discounts.
GRABBING THAT PIE
Paytm Mall has lined up. Rs 1,000 crore to spend on marketing, cashback and promotions during September-October. It is targeting sales of.Rs 3,200 crore ($500 million) during the festive season and a $4 billion gross merchandise volume (GMV) run rate by end of the year.
“The attempt is to become a credible marketplace after Flipkart and Amazon India. That’s what their strategy is around,” said Anup Jain, founder, retail consulting firm Redback Advisory Services. “Snapdeal will not be able to match Paytm Mall because of a shortage of funds. Therefore, the latter will be able to get a larger share of the market.”
Paytm Mall has been rebooting its business since the start of the year. A sudden move in July saw the company delist 85,000 sellers and cut off half of its logistics partners, as it looked to improve customer experience.
It also announced onboarding of 1,000 brand stores and 15,000 brand authorised retailers. The company recently earmarked $35 million to invest in its logistics network to expedite delivery speed.
O2O, WALLET EFFECT
Analysts believe Paytm Mall’s O2O (the online-to-offline model) gives them an edge in the industry, as can be seen during the recent festive sales.
“Some of the categories that have done well on Paytm Mall are appliances because of the high cashback offers and also because of their O2O model which gave them a good boost,” said the analyst quoted above, who believes that Paytm Mall and ShopClues are competing for the third place in this market.
Another edge for Paytm Mall, according to experts, is its wallet, which has become quite pervasive following demonetisation.
The likes of Flipkart and Amazon India realised the conflict of using other payment options on their marketplace and are now promoting their own wallets.
“This is going to a very interesting festive season. On the one hand, a fight for the third place between Paytm Mall and Snapdeal and on the other hand, a fight between Paytm Mall to promote its marketplace offering and marketplaces like Flipkart and Amazon India promoting their wallets,” added Jain.
Source: Economic Times