Online retailer Paytm Mall plans to spend more than $1 billion in two years to strengthen its technology backbone and add more sellers as it takes on cash-rich Amazon.com and Flipkart Ltd.
“With the kind of retail market we are addressing, which is expected to be worth $1.1 trillion by 2020, we would be much larger than any other player,” Amit Sinha, chief operating officer of Paytm Mall, told BloombergQuint in an interview. “Depending on how fast we are growing and getting into the nook-and-corner of the country, our spend will be definitely upwards of a billion dollars.”
India’s third-largest online retailer, run by Paytm E-commerce Pvt. Ltd., is raising $446 million (about Rs 2,893 crore) from Japan’s SoftBank Group Corp and existing investor Alibaba Group Holding Ltd., taking its overall fundraise to more than $600 million.
It competes with rivals with deep pockets. Amazon’s Jeff Bezos has committed to invest $5 billion in India and Flipkart – also backed by SoftBank – has $4 billion in cash to compete. The world’s largest retailer Walmart Inc is in talks to invest $7-billion to become Flipkart’s largest investor, Bloomberg reported.
The size of the opportunity in the world’s second-most populous nations with growing smartphone explains their aggression. India’s e-commerce market is expected to grow at an annualised rate of 30 percent to a gross merchandise value of $200 billion by 2026, according to a report by Morgan Stanley.
Paytm Mall doesn’t build inventory like rivals and is modelled on Alibaba’s TMall that allows businesses to sell online. It has partnered with 75,000 stores and is looking to triple its offline presence. It’s also eyeing a threefold jump in its gross merchandising value to $10 billion this financial year.
“We hit $3 billion GMV run rate last year (ended March),” Sinha said. That’s much lower than its rivals. Forester estimates Flipkart’s GMV at around $8 billion and Amazon India’s at about $6 billion.
“We are not in the same basket as others. For us, a shopkeeper is a key factor,” Sinha said. “How many shopkeepers are on board, how many are active and how many are using new features. All this will be critical to building scale and size.”
(This piece was first published on BloombergQuint.)
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