With eBay deal shopkeepers can source US, European products: Paytm founder

Vijay Shekhar Sharma, founder and CEO, Paytm
E-commerce player eBay has bought 5.5 per cent stake in Paytm Mall. While the deal size has been kept under wraps, sources say eBay invested $160 million in Paytm Mall, which is valued at $3 billion. Numbers aside, Vijay Shekhar Sharma, founder of One97 Communications, in a conversation with Karan Choudhury says while other e-commerce players act as proxy retailers, Paytm Mall is working with offline retailers. Edited excerpts: 

What are the broad contours of the eBay deal? How did it happen? When did the talks begin?

In the beginning of the year, there was mutual introduction to do things together as we had been doing cross-border commerce. One of our board member introduced us to eBay, which has been trying to do cross-border commerce with Indian companies. It invested in Flipkart and Snapdeal but was still looking for a partner. eBay wanted us to take its catalogues in the US and Europe to India. We said we are focusing on offline shops and this could be a good supply source for our shopkeepers. The good thing is that our consumer traffic is growing rapidly, so eBay was interested in becoming a strategic shareholder. In the last three months, we carved out the finer points of the deal.

There has been news around Paytm Mall not doing well. How is the company actually doing? Were there any operational problems that have been resolved? 

I can only say that we have a rock solid business which is spending very less money. We are doing millions of dollars in business this year. This year, we have done a great job of converting our business momentum into good revenue and consumer growth. Paytm Mall is focused solely on shopkeeper commerce. We showcase the supplies that they have. We sell for them online and also bring customers to their shop. We have the element of supplying through the shop.

Do you think Paytm Mall has a better connect with traders and retailers who keep complaining about e-commerce players taking a toll on their business?

Our focus has been to empower shopkeepers compared to other e-commerce players who are proxy retailers themselves. Brands love us as we are driving store walk-ins and sales, unlike other e-commerce players who buy and sell themselves. We have much better connect with the retailers as they do not see us as a threat, unlike other e-commerce players. Our way of doing digital commerce is different from that of others and that is one of the reasons why research reports think that our numbers are not good. They do not take into account the business done by our shopkeepers via the app. The reports mostly monitor data of the courier services. Our shopkeepers may not be always using third party logistics. We are doing around 225,000 orders per day which tells me that we are in a great shape. 

What are the changes that you have made to the business? 

We have cut the warehousing costs from our system. We were earlier funding the merchants with warehousing. We now ask them to store the item in the shop and sell it from there. We have lowered our logistics costs. Our logistics are now hyper local which not only helps us keep a check on our costs but also aids in speedy delivery and better customer experience.

What are your revenue targets for the year?

We have about 300,000 merchant partners and about nine million transacting customers. We ended the last financial year at Rs 13,000 crore and are targeting Rs 17,000 crore in gross merchandise value (GMV) in a contribution-positive manner where we have cut our costs by one-third. Our earlier spending was at its peak – almost Rs 200 crore – in a month. This is down to Rs 30 crore.