Paytm to be one of the final two marketplaces, says Vijay Shekhar Sharma
Vijay Shekhar Sharma, the founder of Paytm, has risen to the occasion to make the most of the demonetization and the cashless economy push initiated by Narendra Modi government. Full-page advertisements in popular dailies, TV commercials, outdoor as well as ambience campaigns across consumer touch-points by the company are a case in point.
The forced adoption of mobile wallets in the country, post the demonetization drive, and the upcoming launch of the payment bank have the potential to catapult One97 Communications Pvt Ltd, the company behind Paytm, into one of the formidable finance services in the country. This is not all.
Sharma is working hard to build an ecommerce platform with support from Chinese online retailer Alibaba and in a conversation with Techcircle, he says, it will be one of the two winners in the game.
You have moved your wallet business to the Paytm bank. What is the thought process behind it? We added wallet into Paytm payment bank with the primary intention of offering WACASA accounts.
Traditional banks are offering CASA (current account/saving account). Whereas in payment bank, we have added wallet by saying WACASA account and that is the crux of inclusion. When you take the approach of 'do-it- yourself' and add mobile, wallet to it, customer acquisition becomes much easier and thus, digital transaction trail starts faster.
Once wallet is moved out, what will be left in the Paytm flagship business?
At the Paytm site, the businesses that are left will be driven by our O2O (online-to-offline) commerce. We have taken a bet on O2O commerce. We believe that every shopkeeper who is not online today will eventually come online and be accepting smartphone-led payments. So, online payment will move to online commerce.
We believe India will move forward as a digital savvy country. It is the 50 million SMEs and small shops that are capturing the market and audience. We don't want to build commerce for bigger brands on Paytm site. We want that to be done by our commerce market place. We want to build O2O commerce on Paytm. Then, we have an advertising and marketing business also.
How will your ecommerce business play out?
Ecommerce business, which is effectively online marketplace, is going to be under the new entity Paytm Ecommerce Ltd. Everything where logistics and delivery are involved will go there. Paytm, Paytm marketplace and bank - these are the three companies that are soon becoming operational.
All the marketplace business we have, we are transferring to this entity.
Your key business now is payment bank. Then, what is your ambition for the ecommerce business?
We believe we will very comfortably be one of the final two players (in the ecommerce business). It is very doable because of the kind of business model we are working on. Marketplace is a very scalable business model while inventory-led retail is a very fast one to build and get certain GMV numbers but it is tough to become profitable and expand. Our business is tough to start, but will have significant scale and margin later on. We have taken a longer haul journey in ecommerce. Since we find that it is becoming an independently sustainable business, we are making it a standalone unit. If we were to take a five-year forward view, we will be one of the final two marketplaces.
Where does that confidence come from? Is it the Alibaba backing?
The inventory-led business needs tons of money while the marketplace business requires tons of traffic of users. The merchants are eager to sell and offer discount and consumers need to be brought. If we have a lot of consumers, merchants and their merchant management ecosystem, we can build this. It is a third party-led system. We don't have the cost of discounting; we don't have the cost of warehousing or any inventory in our system. It is a technology play, not the retail play.
Will this require additional investments?
I think as far as our current investment cycles are concerned, the money we have right now is enough for us to run for the next two years in that (ecommerce) company also. We had taken the money for three years and few months have passed. Now we are sitting with money for two plus years.