Paytm Mall narrows FY19 losses on the back of O2O strategy

Paytm E-Commerce, which owns online marketplace Paytm Mall, has narrowed its consolidated losses for the financial year 2018-19 to Rs 1,171 crore from Rs 1,806 crore in FY18. The company’s adoption of an online-to-offline (O2O) model in early 2018 appears to have worked in its favour, enabling it to pare losses during FY19. 

Paytm Mall reduced expenses under almost all heads with total expenditure down by 17% to Rs 2,139 crore. Other expenses, which mainly included logistics and advertisement costs, dropped 13.6% to Rs 1,913 crore. Marketing costs fell drastically by two-thirds to Rs 317 crore.

The company’s adoption of the O2O model appears to have enabled it to pare losses.

The company’s consolidated revenues from operations also improved 15% to Rs 893 crore.

Earlier, Paytm Mall said that it was tweaking its operating model by shutting down cost intensive warehouses in the face of intense competition from already established players such as Flipkart and Amazon. Other than cutting costs, the O2O model had allowed the company to increase revenues. 

Paytm Mall’s key offerings include fashion, home appliances, consumer electronics and mobiles. Under the O2O model, the platform has signed up sellers registered under its payments system and also used local delivery services to cull costs.

In July this year, San Jose, California headquartered ecommerce marketplace eBay acquired a 5.6% stake in Paytm E-commerce for $160 million. The deal also allowed eBay to sell its global inventory on Paytm Mall. Paytm E-commerce also raised $446 million in August 2018 from Alibaba and Softbank.