Paytm Mall in talks to raise around $500 million; looks to compete with Amazon, Flipkart

As Paytm’s e-commerce unit struggles to compete against Amazon and Walmart-owned Flipkart that jointly commands close to 80% of the country’s e-commerce market, the former is understood to be in preliminary discussion with investors to raise around $500 million, an industry source told FE. The bulk of the funds would be spent on building Paytm Mall’s O2O (online-to-offline) strategy, the source said.

Although Paytm Mall’s revenue in FY18 increased to Rs 744.15 crore from Rs 7.16 crore in FY17, its losses ballooned to Rs 1,787.55 crore in the same year against a loss of Rs 13.63 crore in FY17, according to documents sourced from business intelligence platform Tofler. Amazon’s seller services FY18 revenue stood at a staggering Rs 4,928.4 crore, 57% higher than FY17. The company’s losses also widened by 30% in the same period.

“It is not our policy to comment on market speculation regarding investments. Paytm Mall is focused on executing its O2O commerce and online commerce plans with an objective of contributing positive economics and extracting promotional synergies with the payments ecosystem,” a Paytm Mall spokesperson said.

The O2O model was started a couple of years back but Paytm was not much focused on it then because it was competing with Amazon and Flipkart in the pure e-commerce model. “The entire growth of Paytm Mall was from cashbacks, because of which there was huge cash burn. Realising that it will be difficult for it to compete with Amazon and Flipkart given their scale and size, Paytm Mall started focusing on the O2O model,” analysts said.

Industry experts explained that the O2O model is allowing all the small stores and merchants to list their inventory online on the Paytm Mall platform. The company, in turn is giving them a QR code against each product and swiping machines to enable payment for the product. Customers can check into a physical store and purchase a product by scanning the QR code, thereby allowing them to get the product at the same price in which it is listed online, giving the benefits of discounts. If the store has the stock of the product a customer chooses, then he can buy from there or else the customer can pay for it and within six hours, Paytm will get it delivered to him at his residence.

Reliance Industries Limited (RIL)