One97 Communications owned digital payments and ecommerce company Paytm confirmed that it plans to separate its ecommerce marketplace business from its digital payments business, possibly in the next 3 months. Mint had reported this development first last week.
The Mint report stated that currently, Paytm was receiving 2 million orders monthly and was expecting to grow to 5 million orders by March 2017. It said that Paytm claims a GMV of Rs 20,000 crore, of which 40% came from the ecommerce marketplace. Paytm currently claims to have 125,000 merchants on the marketplace, which it would like to grow to double by the next financial year.
Fencing ecommerce business from financial services
Sundhanshu Gupta, Paytm’s VP, told MediaNama over email that this was being done “in order to fence the marketplace business from the regulated business of financial services.” On being asked the effect and relation of the payments business on the ecommerce one, Gupta said that separating the businesses would have no impact on each other since the marketplace business would continue to operate with the payments business as they do currently. “Shopping is a critical use case for the payments business with the distinction of being one of the rare marketplaces in the country which is closest to profitability,” he added.
Paytm’s focus on payments business
Vijay Shekhar Sharma, founder of One97 Communications told Economic Times that its marketplace was a byproduct of the payments business for the company. Sharma said that while other marketplaces used cash on delivery as a top feature, Paytm wanted to grow its payments system. He added that Paytm would ‘always be a platform for SMEs (small and medium enterprises) to use Paytm payments and financial services.’ The company did 2 billion orders in April, and had a GMV of Rs 52-55 crore daily, Sharma said.
Brands as independent retails on the marketplace
Last month, Paytm added more than 1,000 new brands including Puma, Samsung, Samsonite, Casio among others to its ecommerce platform. Interestingly, all brands on Paytm’s ecommerce platform would act as independent retailers wherein brands can control the sellers; manage inventory, pricing and promotions.
Recent expansions: Last month, Paytm partnered with movie theater chain Cinepolis and dairy company Mother Dairy. Paytm users could book movie tickets across 236 Cinepolis screens. In March 2016, Paytm also partnered with PVR Cinemas and INOX for movies tickets. Paytm had announced that it would launch movie ticketing in September last year.
One97 financials: For the financial year 2014-15, One97 Communications reported revenues of Rs 336.9 crore, a growth of 60.47%, from the year before. Losses, however, increased to Rs 372.01 crore from a profit of 5.68 crore last year. Total expenditures increased exponentially to Rs 674.42 crore from Rs 179.85 crore in the previous year.
Funding: In September 2015, Paytm raised an undisclosed amount in a fresh round of funding from Alibaba and Ant Financial. In August 2015, Paytm invested in Gadgets 360°, a company which houses NDTV Gadgets, along with Inflexionpoint, Pramod Bhasin, Sixth Sense Ventures, Vindi Banga and Hiro Mashita.