paytm mall shutting down

Paytm founder Vijay Shekhar Sharma recently laid to rest all rumours about his company’s ‘plans’ to shut down its B2C marketplace business, Paytm Mall, in view of mounting losses and falling market share, owing to stiff competition from market giants Amazon and Flipkart. In fact, the Noida based firm is also hoping to generate approximately 15% of Paytm Mall’s business in the coming years from its recently launched wholesale B2B arm.

Rubbishing all rumours of his company’s plans to quit or even scale down Paytm Mall because of their failure to acquire loyal customers in the B2B space and intense competition, Sharma clearly stated that this isn’t the case.

“We did add a wholesale category to Paytm payment merchants’ app as a new offering from Mall”, Sharma stated.

He elaborated that the marketplace is performing well and forecasted it to grow 50% to double the GMV to $2 billion by the end of the next fiscal year. Agreeing that his company had asked some of their products on their wholesale site also, he added that the overall environment is conducive for consumer business and has no intention or plan to quit their B2C business.

“Wholesale is an add-on business and budgeted to contribute about 10-15% of total Mall GMV in the coming year…. but that doesn’t mean we are pivoting from B2C,” he said amidst speculations of his mall’s market share has halved over the last year.

Paytm which started as a digital wallet less than a decade ago (August 2010, to be precise) remains the undisputed market leader in its space in spite of increasing competition from other online payment options like Flipkart owned Phonepe and Google Pay, which sprung up much later. Starting off as a prepaid mobile and DTH recharge platform, it gradually went on to become one of India’s best-loved payment apps and completed one million downloads in 2017.

Drawing inspiration from China’s B2C retail platform Tmall, One97 Communications Ltd, the holding company of Paytm’s wallet business, ventured into online retail business, Paytm Mall. In FY 2018, the losses from Paytm Mall operations increased to Rs 1,787 crore on the revenue of Rs. 774.86 crore. Consequently, the combined loss from the online retail business (Paytm Mall) and wallet business (One97) went up from Rs 917 crore in FY17 to Rs 3,393 crore in FY18. But it continues to be a distant third in the online retail space as the now Walmart backed Flipkart and the Indian arm of Amazon together account for more than 80% of the online sales.

The performance triggered in the rumours questioning their ability to stay afloat in the highly competitive online retail space market has been rife.

Paytm got the much-exalted unicorn status in April 2018 when it raised $400 million from Softbank Investment Holdings (U.K.) and its affiliates, and $45 million from the Alibaba group against a valuation of $2 billion. However, off late, the firm got stuck into many controversies that have hit the brand’s reputation.

Allegations of the e-wallet firm breaching users’ privacy by sharing their personal data with the PMO by investigative news website Cobrapost hit their credibility. The company, however, vehemently denied all such accusations hurled against it for sharing any user data with any third party agency, stakeholder, investor or entity whether in India or abroad.

Even while battling on the personal front, the Paytm founder Vijay Shekhar Sharma went on to set up a wholesale arm, Paytm Wholesale Commerce, to strengthen its online retail unit in September 2018, with the objective of promoting B2B trade, including import and export. It thus joined the ranks of market biggies like Flipkart and Amazon who have paid great attention to their wholesale businesses in the last few years.

The two aforementioned online giants buy goods in bulk from manufacturers across the globe and supply them to their registered vendors, using their wholesale units as distribution channels.

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