Is Paytm Mall Losing its Prominence in E-commerce Business?

Is Paytm Mall Losing its Prominence in E-commerce Business?

The profit margin of Paytm Mall is on the decline although the team is striving hard to re-equip its business model. Well, according to numerous authentic sources, it has been observed that the company has been plunging down its B2C (business to consumer) business by completely closing down the fulfilment centres and has ceased from offering cashback to its users. And this act has indeed resulted in a massive drop in traffic to the Paytm Mall’s website.

According to SimilarWeb, a popular New York-based website that provides web analytics for businesses stated that the traffic to Paytm Mall site has come down to 5 million per month in January 2019, there is 88 per cent decline from 45 million visitors a month when compared in the month of October last year.

The Source of the Problem

Well, the sources also reveal that the actual problem began in the month of October last year when the company conducted a series of board meetings and drew a conclusion that their B2C model was not feasible anymore and this is the reason for the sudden scaling down of business. And so, they decided to switch to a B2B model with an online to offline (O2O) strategy. This strategy of theirs seemed to be successful as they acquired two hyperlocal marketplaces namely Little and Nearbuy in the year 2017 in order to strengthen its presence in the O2O space.

The Impact on its Say

The scaling down of the B2C business has undoubtedly affected several Paytm Mall sellers, who are now caught up with inventory.

A Mumbai-based FMCG seller expressed, “They (Paytm) asked us to stock a month’s inventory for December last year and now asking us to take back the inventory. They have shut the fulfilment centres at several places. We can’t return these unsold inventories back to the manufacturers now.”

Another seller stated “Paytm stopped giving cash back and this has resulted in heavy losses for us as consumers have stopped buying. I was doing business worth ₹10 crore a month, but now it has come down to ₹10 lakh. They stopped cash back without even informing us.”

Also, a Delhi-based seller said, “This is the last of the leftover stocks parked at the fulfilment centres and no seller has sent any inventory in the last two months. The unsold inventory now becomes our responsibility.”

Furthermore, the BusinessLine team also interacted with over thousands of sellers nationwide and each one of them cited the same issue.

So, without a doubt, and given the above instances, it is clear that Paytm Mall which began its services in the year 2017 has been incurring huge loses. As per its filings with the Registrar of Companies reveals that Paytm E-commerce Private Ltd reported a 100 per cent growth in its revenues for FY18 at ₹775 crore. However, during the fiscal, the company’s losses grew 150 times which came up to ₹1,800 crore.

Paytm Founder’s Optimism

Vijay Shekhar Sharma, the founder of Paytm, has declined all the allegations. He reported to the BusinessLine “I have mentioned earlier also that we (Paytm Mall) will have a majority business by O2O category. Grocery from our store is becoming bigger and bigger.” He also attributed that the company’s GMV (Gross Merchandise Value) has grown rapidly and that the company is pushing the inventory of offline stores nearer to customers for quick delivery.

The experts opine that with such a cut-throat competition in E-commerce, where the online portals like Amazon and Flipkart have already made their dominance it is certainly a challenge for Paytm to make its stand in the current market given its present condition.

It is rightly said, “Too many cooks spoil the broth.” Well, one of the reasons for Paytm’s fall is that they are getting into too many businesses at a time from payments to banks to mutual funds and to e-commerce which is a way too much.

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