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Paytm Mall delists 85,000 sellers; Our take on the clean-up

By Riddhi Mukherjee and Nikhil Pahwa

Paytm Mall has revamped its seller onboarding process and has made it mandatory for sellers to furnish brand authorization letters and undergo strict quality and service audits. Paytm will check the prospective seller’s registration number, shop location, shop photos and GSTIN among others before listing their products on Paytm Mall. This change in guidelines has resulted in over 85,000 existing sellers being delisted from the platform. Paytm had demerged its e-commerce business into a separate entity called Paytm Mall, which is similar to Alibaba’s TMall, in February this year, and appointed appointed Amit Sinha as its chief operating officer (COO) to lead the Paytm Mall business. Paytm Mall raised $200 million from Alibaba Group Holding and SAIF Partners, in March this year, of which Alibaba invested $177 million for a 36.31% stake and SAIF Partners invested $23 million for a 4.66% stake.

The company will also allow brands and shopkeepers to determine the return, exchange and refund policies for their products being sold on the platform. However, this might result in customers potentially facing a different shopping experience, if for the same category of products the sellers are different and have set different return, exchange and refund policies. We’ve written to Paytm to learn more about how they will oversee the existence of possibly multiple return, exchange and refund policies for similar products on its platform. We will update once we hear back from them.

Paytm Mall will be adding a further 3,000 agents to expand into tier-II and tier-III cities and towns to bring on board neighbourhood kirana stores and local authorised brand outlets.

Earlier this month, Paytm Mall said it will be hiring 2000 more employees in business and technology by the end of this year. It also absorbed 800 employees from the parent company, and made some internal appointments in key executive roles. In June, Paytm Mall began exploring the offline-to-online (O2O) commerce by cataloging inventories of physical shops to enable discovery of products online.

MediaNama’s take (Nikhil adds)

MediaNama readers might remember that in 2014, there was a major impasse between brands and ecommerce stores, with brands such as Lenovo, Dell, Nikon and Hewlett Packard had actively discouraged customers from buying online, going as far as naming stores like Snapdeal, Amazon India, eBay India and Flipkart. There have been complaints about unauthorised and fake products being delivered by merchants on e-commerce marketplaces. I’ve received photocopy versions of books via Amazon India. The problem of fake products is real.

What Paytm is also doing here is cleaning up its systems by enforcing a higher degree of compliance: online platforms, whether they are taxi aggregators or YouTube or ecommerce companies, tend to do this… they have a low degree of compliance norms which makes it easier for merchants or content providers to sign up. There are instances of violations – copyright violation in terms of content, and fake products or unreliable sellers in case of marketplaces. Platforms take wait-and-fix approach. In case of content, it is codified in the Digital Millennium Copyright Act, and in case of India, to some extent, the IT Act: they act only on complaints, and remove sellers only if they breach a certain threshold in case of violations. They try and keep customers happy by taking on the liability, and either paying the customers back or ensuring that a genuine product is sent. It really depends on what level of fraud a system is willing to deal with, because 100% compliance is impossible.

What Paytm appears to be doing here, now that probably it has enough sellers, is improving reliability by forcing a higher degree of compliance. Because it possibly has enough buyers, and no single seller has sufficient negotiating power with a platform. The sellers have no choice but to comply.

Another approach is what YouTube did with music streaming: the platform was full of pirated content, and faced multiple court cases (Viacom, T-Series etc). Google took a slightly different approach there: they pushed music labels to do the monitoring of copyright content, made it easier for them by deploying audio mapping using “Content ID”, and allowed labels to either take down or claim content. Labels were in a position to monetize piracy this way, and the consumer gets access to more music. Obviously, this isn’t something that is possible with ecommerce.

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    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ