Payment wallet major Paytm is preparing for a journey to a numero uno position in the online travel space dominated by incumbents MakeMyTrip and Yatra. Based on the number of travel tickets it books, the Alibaba-backed company claims to be second to MakeMyTrip-Ibibo.
The advantage Paytm enjoys over other online travel companies
is a large user base and the opportunity to get a chunk of these users to book travel tickets. “Our biggest strength is the reach we enjoy. Millions of users can come online through us to book a travel ticket. Right now, we have about 200 million users on the Paytm platform. If we look at the total number of consumers buying online travel it may not be more than 30 million. So, that is the gap we want to fill,” Abhishek Rajan, vice-president (travel marketplace) at Paytm told Business Standard.
Paytm entered the travel domain with bus ticketing a couple of years ago and says it is the second largest online player in the segment after redBus. Train ticket booking business is four-five months old and the company claims to be booking in multiple of ten thousand daily, becoming the next biggest player after IRCTC. Hotel booking started at the end of 2015 and is growing.
Flight ticketing business is six-seven month old and here the company is not among the top three players. Paytm crossed a gross merchandise value (GMV) of $500 million (annualised) from travel in February. “That is very significant for a new category. We want to double it in next six months. These are huge numbers and hence there is lot of focus,” said Rajan. Earlier this month, Paytm took a new 150-seater office space in Bangalore, where a 110 people team dedicated to travel is based. The company said it booked 10 million online tickets (bus, rail and air) in the past 12 months and aims to double it in the next 12 months.
Rajan said the economy was at an inflection point where fares are more affordable and people have aspirations to travel. “Such people may end up booking online gradually. We want to go after this user base. Our payments bank will help us access another 500 million users in the near future. That is a huge pool of people whom we can introduce to online travel”.
Paytm has relied on discounts and cashback to grow its online travel business. But Rajan said discounts couldn't continue indefinitely. “We have brought down the discounts in bus (ticketing) but customer loyalty has not been impacted. We continue to grow and repeat transactions. We will take the same path in every category. There is no discount in train ticket booking. Ultimately, the business has to make money. Investors are confident that since we have done that in other categories, we will do it here,” he said.
The aggression of Paytm might be a worry for incumbents. But Rajan said Paytm is not looking at taking share away from the existing market.
“We want to create a much bigger market, mostly untapped”. Yatra said it would be able to safeguard its territory. “Given our loyal base, we are in a relatively secure position irrespective of what happens on the competitive front in the short term. Players like Paytm will also have to figure out which all battles they want to fight. Capital is scarce at the end of the day and at some point one will need to prioritise,” said Dhruv Shringi, co-founder and CEO, Yatra.