Images: Amit Verma
Samsung electronics co sells its phones through about 150,000 authorised shops in India. And Paytm Mall, through a accord with Samsung that started in November 2017, is bringing all of them assimilate its online marketplace, giving anniversary one a QR code, and the requisite training and support.
Paytm Mall is the afresh formed ecommerce business of One97 Communications, which was afar from the ancestor to action apart about March-April 2017. Noida-based One97 Communications operates the Paytm adaptable wallet. And with abetment from China’s Alibaba Group Holding Ltd, and Japan’s SoftBank Group Corp, architect Vijay Shekhar Sharma, 39, has been accretion into online commerce, cyberbanking services, including abundance administration and insurance, as able-bodied as biking and entertainment.
While Samsung is additionally accepted on sites such as Amazon and Flipkart, its massive offline administration is its strength. However, as online smartphone sales rose in India, it was a claiming for the concrete aliment to bout the offers on ecommerce sites. Accepting assimilate Paytm Mall’s belvedere meant, be it at a concrete retail abundance or on the online app or website, or alike on Samsung’s own online storefront, “the action is the same”, says Amit Sinha, a carnality admiral at Paytm and COO of its ecommerce business.
“The O2O action has been alive wonders for us,” says Sinha. O2O refers to ‘offline-to-online’ because Paytm is attempting to affix to the net via its QR codes every ‘offline’ or concrete abundance it can reach.
And not aloof with Samsung. Red Tape, Khadim’s shoes—the closing decidedly acclaimed in Kolkata—and Lenovo laptops are amid the abounding brands that are alpha to tap Paytm Mall to addition their sales.
In 2017, One97 Communications restructured itself. The adaptable wallet annual became allotment of the newly-formed Paytm Payments Bank, which in about-face will advance the company’s cyberbanking casework attack for consumers. And the ecommerce allotment of affairs assorted articles and services—from alternation and cine tickets to smartphones, air purifiers and abrasion machines—became allotment of Paytm Ecommerce Pvt Ltd, a abstracted aggregation that runs the Paytm Mall online exchange and adaptable app.
“We are adopting a ample bulk of money on the ecommerce ancillary as we speak,” says Sharma clearing into an annual with Forbes India. That will accomplish the ecommerce business abandoned “doubly unicorn”, he adds, and the all-embracing aggregation could be admired as aerial as $12 billion. That would top Flipkart’s bulk of $11.6 billion at the time of the Bengaluru rival’s $1.4 billion fund-raise in April 2017, possibly authoritative Paytm India’s most-valued startup. Paytm Mall’s allotment accord is accepted to achieve soon, he says, but doesn’t add details.
The funding, led by SoftBank, is to the tune of ₹3,000 crore, a actuality with ability of the transaction tells Forbes India, and Paytm Mall will acceptable accession added money as well.
India’s retail arena comprises some 15 actor shops, with an cutting majority of those actuality run by alone owners. They abridgement scale, and accept bound inventories, Sinha credibility out. Paytm affairs to action them a way of eliminating these two obstacles, so that those mom-and-pop aliment could do a lot more.
Therefore, there will be millions of credibility of sales and fulfilment adjoin a few ample warehouses that the big ecommerce sites have. “That is the bulk acceptance that we are architecture on and aboriginal after-effects accept been absolutely good,” Sinha says.
Paytm has over 300 actor users and the aggregation processes over 10 actor affairs a day, says COO Kiran Vasireddy. It has 6 actor merchants on its network. “The key is to ability out to every affectionate of baby and ample abundance to hit 10 actor aliment by the end of March 2019,” he says.
Loans, not aloof to consumers but additionally to sellers, anatomy an built-in allotment of the O2O business as well. Booty the case of Samsung phones, for instance. Aback anniversary of the 150,000 aliment becomes an “endless aisle” for the chump and the seller, Samsung gets to apperceive what is affairs where, and added analytics facilitate what comes next—quick and on-the-spot loans.
each abundance can action the aforementioned plan from the aforementioned agent “and the attack goes alive at the bang of a on”, he says. “It’s a abysmal and accommodating accord that we’re accepting into with Samsung.”
The accent of the lending accomplishment is underscored by the actuality that One97’s CFO himself is answerable with active the lending business as well.
Madhur Deora aing One97 and stepped into that position in June 2016. As an advance cyberbanking veteran, advanced at Citigroup, he already knew Sharma and had formed on the company’s deals, including its important fundraising efforts.
“Offline merchant payments is one of the fastest growing businesses at Paytm,” says Deora. Therefore, whether it’s a chump who has a clue almanac of honest purchases and basal returns, or a agent who has been accomplishing “stable” business application Paytm, why should they not get adorable loans, is the logic.
A ₹10,000 accommodation for a chump or a ₹2 lakh accommodation to a agent would not be bland the acceptable cyberbanking way. A Paytm user, however, already has a history of affairs on the platform, and the agenda belvedere is far added acquiescent to that quick loan, point out Paytm officials. The adventure is the aforementioned aback it comes to the merchant. Paytm’s acknowledgment for now is to accomplice with ample NBFCs, which accommodate the loans, and see their portfolio expand, while Paytm brings in the tech platform. Paytm has also, in parallel, congenital the processes to credit-score its barter and added analytics for accelerated processing.
Banking with PaytmMuch of 2017 was spent in architecture one added important way in which to appoint the consumers appropriate from aback one receives money from any source—be it salaries or that quick ₹500 adopted from a friend. This was the Paytm Payments Coffer which, aural ten months of action operational, has already confused to action agenda and concrete debit cards to its customers. Aback its debit agenda was launched, “we got orders from 800-plus cities”, says Renu Satti, the bank’s CEO, who has formed with Sharma for over a decade at jobs that included active HR operations.
Though currently best of the bank’s 180 actor barter are those who were absolute mobile-wallet customers, the bank’s accessibility is affairs in new ones too. Paytm requires its accumulation coffer annual holders to advance no minimum antithesis clashing acceptable banks.
Besides, India’s payments coffer rules abode a ₹100,000 rupee absolute on the antithesis captivated in an annual at a payments bank, at the end of a business day. Paytm is gluttonous to about-face that into an befalling to action a simple wealth-management product, by partnering with banks to which balance banknote could be confused for added adorable returns. For now, one gets anchored deposits with IndusInd bank. On-demand deposits will anon be started, Satti says.
Paytm Payments Coffer is additionally aggressive with businesses like Sodexo, with accumulated offers. It has added added than 500 businesses that are giving Paytm’s agenda aliment wallets to employees, she says. New bales on reimbursements are in the offing.
The coffer will accessible 100,000 cyberbanking outlets forth the aforementioned curve it is architecture its O2O network. So, apprehend your adjacent pharmacy or grocery boutique to additionally become your banking-correspondent. Salary accounts are accepted to be offered soon, as well.
Further, India as a bazaar offers its own challenges and is no allegory to China, credibility out Tripathi, an able in cyberbanking and cyberbanking services, who has brash audience on all-embracing change and agenda innovation. It is still absolutely some way abroad from actuality absolutely or alike heavily digitised admitting the big changes over the aftermost two years. Ample genitalia of the citizenry still comprise bodies who are poor and digitally illiterate. “There is a huge aberration amid India and China. China is so far advanced in agreement of digitisation, prosperity,” he says.
While India is adopting digitalisation at a accelerated pace, the calibration is altered compared with China. The cardinal of bodies accustomed out agenda affairs in China is appreciably added than in India. Therefore we allegation calibration afore the aforementioned models that are alive in China assignment in India, says Tripathi. “Getting to China’s calibration will booty time in India, and the payments businesses will accept to be accommodating afore they can body able bottomlines.”
The business case hinges on accumulating a fair bulk of abstracts on barter that can be acclimated to cross-sell added products. These accommodate cyberbanking articles like abundance administration and lending as able-bodied as non-financial ones, says Tripathi.
An ecosystem playBeyond the payments bank, the company’s cyberbanking casework business will extend to lending, allowance and abundance management. Paytm Money, addition absolute assemblage like Paytm Mall, will anon alpha operations, affairs alternate funds, The Economic Times appear on March 7, citation the unit’s head.
Paytm wants to be present in aggregate the chump wants to do with money—“earn, save and spend”, says Sharma, with deposits and abundance articles acclamation the first, allowance the second, and the adaptable wallet and Paytm Mall for the third.
Sharma has a accelerate on his phone: A array of a Venn diagram, but bare of the intersections of assorted clusters, that shows the ecosystems actuality congenital by Tencent, Amazon, Alibaba and SoftBank in India. It has Paytm in it and some of its rivals. Some accept accepted backers now, he credibility out.
“Ultimately, India will accept an ecosystem of a few companies with this abounding assemblage of casework for consumers. It’s bright this will be a action amid ecosystems, and no best amid one payments aggregation and addition payments company,” says Sharma. “Or addition aggregation that is accomplishing payments,” he adds, apropos to Facebook’s WhatsApp burning messaging unit, which started alms payments casework to some of its 200 million-plus users in India. In mid-February, Sharma went on a abuse on Twitter, criticising how WhatsApp’s attack into payments in India didn’t appear on a level-playing field.
In his office, Sharma downplays the baby tweet-storm he affected off: “I anticipation a aggregation was aggravating to be too smart; I wasn’t in India, I didn’t get a adventitious to allocution to added people, and (at the end of the day) it was a cheep that concluded up acceptable a lot more, a lot bigger than a tweet… The conversations about WhatsApp, it got cute.” However, in the end, this isn’t about a payments aggregation angry another. “No it’s about action of ecosystems,” he says.
At the affection of it, paymentsThat said, Sharma additionally offers insights into why payments will abide axial to Paytm’s plans. They are an important way in which barter will accumulate advancing aback to the belvedere because it’s a high-frequency activity.
“The ecosystem is based on the belvedere of what the chump is aing with you for, and how frequently,” says Sharma.
Other ecosystems advancing up in the country are “led by commerce” while Paytm banks on payments, he says. The above isn’t as abundant a high-frequency action as the latter, and alike business requires a payments step. On an average, a chump transacted on Paytm in some way about 32 times in 2017, which was about bifold the boilerplate in 2016, and the aim is to booty it to 30 times a month.
Paytm aspires to be one of those companies with at atomic a bisected a billion users, says Sharma. “The adventure is long, and our appetite is, can we accept 500 actor bodies application us every ages and anniversary of the year. That’s the battle, that’s the chase.”
The bounded business bet, too, isn’t a bet on actuality a retailer, but one on architecture a ample ecosystem of brands and retailers, which appetite to ability the chump on the smartphone, he says. The archetypal is one of partnership, which will win in the continued term, Sharma asserts, aloof as it has formed in China.
Some six to eight months into ablution Paytm Mall, the aggregation is already the better agent of laptops there, he says, and the additional better accessories seller—“tough, commoditised categories”.
Categories such as advantage and FMCG, which are high-frequency areas, acknowledgment to the echo use of Paytm, accord bearing to high-repeat arcade also. The aggregation is anon partnering with bounded shops, brands and their administration networks. In Navi Mumbai, for instance, or Gurugram, orders are actuality abounding by your bounded supermarket, he says.
That Alibaba, through its contempo investment, has additionally become an important stakeholder in Bengaluru’s Bazaar Grocery Supplies, which operates the BigBasket online grocery store, opens up avenues for them to accomplice carefully with Paytm Mall.
Sharma adds that aloof like Amazon or Tencent, which abide to aggrandize massive ecosystems of assorted articles and services, Paytm will body its own in India—ergo aggregate from ecommerce to activity allowance to one of Sharma’s favourite initiatives, which is O2O.
“We are authoritative money if we booty these costs into annual and at the calibration that we are talking about. We accept alone two costs left—staff and office,” Sharma says.
He asserts that alike with Paytm Mall, his costs are lower than those of his better competitors. One acumen is that Paytm Mall has no warehouses of its own, “and we additionally accept multi-party contributions”, to the cash-back and added discounts, he says.
Clever use of technology is another. “We are able to adumbrate on the fly, whether you’re action to aish this flight admission or bus admission or not,” says Sharma. Because Paytm knows what you’ve bought, and what your buzz is behaving like appropriate now. Therefore, says Sharma, “we can action articles such as abandoning allowance actual calmly to others… accept cipher knows this, but Paytm sells 2 actor allowance behavior a ages appropriate now,” which users can buy from a host of insurers listed on Paytm. This includes, for instance, allowance with alternation tickets. “Insurance is a big business for us, ascent fast,” says Sharma.
Paytm is additionally gluttonous authoritative go-aheads for its own attack into activity and accepted insurance. It has additionally become the second-largest cine admission agent and the second-largest biking booking company, he says.
Industry analysts concur: “If you attending at the e-tailing industry, it is accumulation amid these three players—Amazon, Flipkart and Paytm,” says Ujjwal Chaudhry, assurance administrator and arch of e-tailing convenance at RedSeer Administration Consulting in Bengaluru. “While the aboriginal two accept the better share, Paytm Mall has apparent the best growth, admitting on a abate base.”
While Paytm believes ascendant ecosystems will consolidate the categories, “We still anticipate it will be a class by class play,” says Chaudhry. Cash-back offers currently assignment as a able enticement, and while Paytm has fabricated ample strides in areas such as cine ticketing, for instance, “it charcoal to be apparent if they can catechumen bodies into added services,” he adds.
The abounding changes accident in India today are still alone “the beginning to a 28-chapter book that is appropriate now actuality written”, said Sanjay Swami, a managing accomplice at Bengaluru’s Prime Adventure Partners, a VC close that has a able fintech portfolio. He was responding to a catechism on how the Amazon-Flipkart-Paytm antagonism ability comedy out, at a columnist appointment in Bengaluru afresh to advertise the firm’s third fund. “A lot is action to happen… there will be some big companies that don’t abide today that will be created.”
That agency there will be aberrant levels of assets pumped in and “incredible” technology-based abstracts will be approved out—far altered from what has happened in the US or China, Sharma says. In America, the assertive players were absitively in the desktop era itself, and in China, the new players of the adaptable era accept taken charge.
India, on the added hand, is seeing a “potpourri” emerge, with adaptable internet arch the charge, but it’s a bazaar area the desktop is additionally present, and, clashing in China, all-embracing competitors are thriving.
“ The key is to ability out to every affectionate of baby and ample abundance to hit 10 actor aliment by the end of March 2019.”
In commerce, the online exchange will beat the retail archetypal and that is the time Paytm would attending at its options, says Sharma. There are abridged plants in the appointment room, aimed at charwoman up the air inside. Outside, a adolescent staffer takes snapshots of the readings on strategically placed air purifiers. That agent “reports aback to me”, Sharma says. “I’m aggravating to actualize a cushion about me and my accompany and agents and their families… aback you appear to office, there should be above air quality, that is my commitment.”
However, outside, there is no cushion adjoin the aggression of antagonism from Flipkart, which too has big cyberbanking casework operations planned, led by its PhonePe unit. Or from Amazon, which has become an accepted ecommerce amateur in India, with its Prime casework trusted by millions.
Sharma’s way is via payments, and via the O2O network. “I access barter on payments, I don’t accomplish money on them, but I accomplish money on business and cyberbanking services,” he says.
Profitability, however, won’t be on the border until Paytm can hit its 500 actor barter target. “Maybe you’ll alpha seeing traces of that above 300 actor or 400 million. It’s a huge market, so can’t leave any cogent set of barter on the table,” says Sharma.
Once aloft a time, Sharma had advised an IPO, aback his was a abundant abate venture. That he absolved abroad from the plan has accepted fortunate, with the affectionate of deep-pocketed and accomplished backers that One97 has begin now.
The clandestine investors are so able and invested strategically in Paytm’s success that there’s absolutely no allegation for an IPO, he says. He would rather accomplish the aggregation a “very complete clandestine company” first.
The aggregation has about 16,000 full-time staff, with almost one in four of them actuality engineers. At this size, worries are already not that of a startup, but of a beyond enterprise. “The unknowns like bodies arena dirty, or abrupt authoritative changes anguish me,” he says.
Everything abroad he seems to booty in his stride. Compared with two years ago, or alike a year ago, he says, “I would accept never accepted that we would be accomplishing allowance at the calibration that we are accomplishing now, and what our affairs would be,” Sharma says. “Today, in India, you can body article world-class, fabricated in India, which can go places. This is what excites me every day now—an befalling to actualize a new cyberbanking casework archetypal that can go out of India and appearance to the apple that this is how it is done,” he says.
It’s additionally about demography risks. An aboriginal bet Paytm took has paid off amply in adopting the contour of the startup. “We bet the house,” says CMO Shankar Nath, of the over ₹203 crore that they spent in 2015 to win appellation advocacy for all candid matches played in India administered by the Board of Control for Candid in India for four years through 2019. At that point, it was a big sum for Paytm, but not so abundant today.
Paytm’s is a “world-first” model, Sharma says, and it ability still be a moon shot, but his dream is to see its logo rub amateur with those of the better companies in the world. He is aboveboard aggressive by Deepak Parekh’s success at HDFC, he says.
“They are a bank, a alternate fund, an insurer,” says Sharma who nurses an appetite to accomplish Paytm’s cyberbanking casework the HDFC of the adaptable internet age in India. After the interview, Sharma kicked off the Friday black with one of his favourite songs: Coldplay’s ‘A arch abounding of dreams’.
With inputs from Sayan Chakraborty
(This adventure appears in the 30 March, 2018 affair of Forbes India. You can buy our book adaptation from Magzter.com. To appointment our Archives, bang here.)
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