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Vijay Shekhar Sharma On Paytm Wallet, Unclaimed Amount, & Why Mobile-Only Marketplace

VSSIn this part (part 2) of our conversation with One97 CEO Vijay Shekhar Sharma, we explore why Paytm launched a marketplace only on mobile, whether recharge will decline in importance as a category for the company, the role of Paytm’s semi closed prepaid wallet, how Paytm is handling the situation of (old) closed wallets and unclaimed deposits, among other things. Read part 1 of this interview here.

MediaNama: You didn’t launch a separate Paytm marketplace app. You upgraded the old one. What has the impact been?
Vijay Shekhar Sharma: Firstly, we did it on the iOS because it does around 10-15000 orders a day for us. Doing it first for iOS was to get feedback from consumers, for course correction, instead of shifting everybody. Consumers who were used to recharges as a primary product haven’t said that it’s great to have shopping. Some customers found it a surprise. We didn’t integrate postpaid bills (payment) either because prepaid is the primary recharge business, so consumers even thought we had given up on postpaid.

MediaNama: You’re not separating recharge from the marketplace?
Vijay Shekhar Sharma: We believe that there is a value (in the marketplace) for the consumer who is coming here for recharge.

MediaNama: How do margins differ for you, between recharges and shopping?
Vijay Shekhar Sharma: Upto 10x (margins on some categories of shopping can be 10 times that on recharges).

MediaNama: Going forward, recharge is going to become smaller and smaller? Will there be a time when Paytm will not do recharges and only be a marketplace?
Vijay Shekhar Sharma: We believe that recharge itself is very sizeable business for us. It is the dominating category for us, it is what defines our experience, from customer acquisition to support and servicing. It will remain the case for the next 4-5 years. There won’t be a day, yet, where we say this is not something that we want to do. Consumers ask us to sell books and phones. Recharge is one category, and apparel is another. There is an enhancement in value in an integrated offering.

MediaNama: So why did you go not go for electronics? It may be a low margin category, but demand is higher than for clothes and apparels, right?
Vijay Shekhar Sharma: Somewhere I read that Amazon, in a private conversation, said that they don’t know how to do mobile and apparel. We decided to do both. In our mind, recharge is one category and apparel is another.

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MediaNama: Explain that only mobile philosophy. The web is bigger than mobile for you, then why would you let go of that market? It’s one thing to be web and mobile, and another to be only mobile.
Vijay Shekhar Sharma: We believe that in 2015, we are taking a punt that more orders will happen on mobile than desktop. Internet companies have so much to do on the web, that their attention is diverted from mobile. There is no desktop Internet company which has made mobile incredibly well, unless it is an operating system which is Android (Google). Everyone who has an Internet product is struggling with mobile, the way the offline companies struggled with Internet. Messenger is a native feature for mobile. (Editor: Not necessarily. People are used to chats online, and there are commerce sites with integrated chat online.)

Our ambition is that by 2015, we will have 1 million orders a day, and if that happens, that’s a significant mobile first user. For us, that customer acquired is far more important than a current desktop customer. The true power lies in the incremental new customers. Internet is fairly cut-throat with SEM and affiliate marketing, but the mobile is a blue ocean for us.

MediaNama: This is contrary to the rationale that you used for continuing with recharge, which you said will be a sizeable business for you. The Internet can be a sizeable business for you as well…
Vijay Shekhar Sharma: Our criteria of selecting a platform: Two years from now, will it be growing or decreasing? Recharge will be growing, but desktop will be declining.

MediaNama: Or is it down to lesser competition on mobile?
Vijay Shekhar Sharma: That’s a problem of competition, I don’t think they’re less savvy. It’s just that they’re not primarily looking at mobile. We will be far better because of the product focus on mobile. I’m not relying on less competition, but that we will have a better product.

MediaNama: How does Paytm wallet fit into your marketplace model? You waited for the semi closed prepaid wallet license before your launched the marketplace. How many active users do you have on Paytm cash?
Vijay Shekhar Sharma: At Paytm, we believe that you must be ready with the component that is critical for your key offering. If we were focusing on mobile marketplace, then mobile payment was the problem we had to solve. Mobile native features were necessary. The impulse buy that consumers do on mobile, the existing payment mechanism stops it. I think the true marketplace experience can only happen when your payment system is totally agnostic to the merchant. Right now, I’ve had experiences where if i’ve returned an item from a particular merchant, I’m locked in and can only use that merchants catalog. That is a broken experience for the consumer. If you want 1 million orders a day, it has to happen on day 1. It allows consumers to get a refund and use it across all merchants on the marketplace.

MediaNama: Semi closed wallet is a new sign up, and consumers need to give their consent for it.
Vijay Shekhar Sharma: When we launched in earlier, it went through an increase in queries, in terms of traffic. We went through a rough patch in terms of stability. In January, we reported more than 600,000 consumers on semi closed prepaid wallet. That’s in our first month. We will be able to showcase a large user base by summer this year.

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MediaNama: What happens to the closed wallet users?
Vijay Shekhar Sharma: RBI doesn’t allow merging closed loop wallet customers into semi closed wallet customers, so we had to get the balance given to them as a promo code for recharges. It could only be used for recharges, which created a confusion. The migration could not be automatic. That is why our customer base isn’t a couple of millions.

MediaNama: What happens to unclaimed amounts on wallets?
Vijay Shekhar Sharma: We are sending out emails and calls to consumers. We are trying to tell them use that balance. With RBI, we are discussing with RBI about how to go about it. We will wait till the time period has been reached.

MediaNama: Where do you see the marketplace situation changing? Everybody seems to be moving towards a marketplace.
Vijay Shekhar Sharma: India’s online commerce will be mobile commerce. Mobile commerce and online commerce require two strategies: inventory led or via partnerships with many. We believe this country needs a platform where consumers shop from the merchants whom we shop from. We want to enable mom and pop shops and not eat into their share. We are here to enable millions of merchants to sell millions of products a day. Merchants need a platform, consumers need a destination. At scale, this is our strategy, and only this will allow us to have a million orders a day. We would never achieve it with a self inventory led model.

MediaNama: How do you address the discovery problem for merchants at hundreds of thousands of merchants and millions of products?
Vijay Shekhar Sharma: It is a far bigger technology problem than we would otherwise think. I would always prefer a partner taking care of warehousing and logistic. In terms of merchant discovery, mobile can enable a lot more contextual discovery than an Internet site can.

MediaNama: But the problem for mobile has been one of discovery. The propensity for inorganic discovery is low on mobile as the web.
Vijay Shekhar Sharma: If you look at our app, it has tried to make an item into an app. I believe some of the app stores like iOS have done a fantastic job, making 90% of their apps downloaded once a month. This is where we should focus our energy.

MediaNama: Your plan was to look at a digital goods marketplace, like games, CRBT and other mobile content. What made you change?
Vijay Shekhar Sharma: Everything that google play store sells, we don’t need to sell. We don’t need to sell music, movies, apps, games, ringtones and ebooks. These require direct competition with a device + OS owner, which is a capability that many independent players do not have. We decided not to go into these categories. Our digital goods included recharges, bill payments, tickets etc.

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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