Paytm Mall shuts down Warehouses to cut down cost

• Paytm Mall is currently valued at around $3 billion since e-bay decided tp buy a 5.5 percent stake in it for $160 million.
• Online retail sales in India are expected to grow to about $72 billion in three years, according to research firm eMarketer.

E-commerce marketplace owned by One97 Communications, Paytm Mall is shutting down its warehouses and adopting a hyperlocal model, which will help it keep tabs with FDI in e-commerce rules and reduce costs associated with the logistics.

This will help the company which is the third-largest e-tailer on multiple fronts. It will reduce the cost as the company now does not need to own and operate its own warehouses. Local courier services will be used by the sellers on the platform for delivery hence reducing the cost of deliveries and cutting down the time.

“The cost of acquiring sellers has gone down as most of these sellers were already accepting payments using Paytm,” said senior VP and CFO of Paytm Mall, Rudra Dalmia.

The company is currently valued at around $3 billion since e-bay decided tp buy a 5.5 percent stake in it for $160 million and is aiming to become Ebitda-positive within two years. Paytm Mall is eyeing a Gross Merchandise Value (GMV) of Rs. 17,000 crore.

Dalmia also said that they were doing course correction. The business can only be profitable if it becomes a true marketplace and not relies on an inventory-based model because the latter comes with the baggage of high costs. Both of the companies partner eBay and Alibaba are making money.

Recently, e-commerce firm eBay which is based in the US has bought a 5.59 percent stake in Paytm Mall for $160 million (around Rs. 1,101 crore), as said by Paytm E-commerce Pvt Ltd. in a regulatory filing. This deal was carried out through an issue of preferential shares on a private placement basis to e-bay.

With this round, Paytm Mall has raised about $805 million in total funding across three rounds.

SoftBank will now have 21 percent post the investment of eBay and Alibaba’s Singapore-based entity owns a 30.15 percent stakes.

“We are proud to have investors like eBay and Alibaba who have been disciplined investors and disciplined operators,” said Paytm Mall ED Rudra Dalmia.

This agreement will see more than a million products of eBay made available for purchase to users on Paytm Mall. Although eBay will continue to operate its e-commerce store in India.

This deal will help Paytm strengthen its position in the e-commerce market in India, where it competes with Walmart-owned Flipkart and Amazon India. Online retail sales in India are expected to grow to about $72 billion in three years, according to research firm eMarketer.