Is Paytm Spinning Off Its Marketplace For Alibaba’s Entry In India? Indian Ecommerce All Set To Shakeup

As per reports emerging, Paytm may soon spin off its ecommerce business and pave way for Alibaba to enter in India. As per an unnamed official, the launch of Alibaba’s marketplace in India, established on the backdrop of Paytm’s marketplace, would be launched in November this year.

Right now, officials from both the companies are finalizing the terms and conditions and paperwork are being sorted.

This spin off of Paytm’s marketplace and subsequent entry of Alibaba in mainstream Indian ecommerce would shake up the industry. Alibaba would now directly compete against Flipkart & Amazon, which have been controlling the stakes as evident in the recently concluded festive day sales.

While Alibaba has restated that India is their important market, and Paytm is a major strategic partner, Paytm has refused to share any details of this spin off.

In case such a diversion happens within Paytm, then two things would be clear:

a) Paytm would now focus entirely on their mobile wallet and payments bank business

b) Alibaba would acquire all existing Paytm’s ecommerce customers, and using this as a foundation, will unleash a major drive to grab market share.

The role of Snapdeal, where Alibaba has controlling stakes, is still not clear.

As per the reports coming in, Alibaba will also launch their Tmall portal in India for targeting B2C market, wherein Big Bazaar would be one of their key sellers.

Paytm’s Last Festive Day Sales?

Meanwhile, Paytm has silently launched their 3-day festive extravaganza: Maha Bazaar which is being conducted between October 12 and 14th.

In case the spin off happens, then this would Paytm’s last such B2C centric festive sales, and the way it has been marketed clearly showcases that the spin off is eminent.

First of all, unlike Flipkart, Amazon and Snapdeal, Paytm didn’t advertise the festive sales in newspapers, but rather they are targeting Tier 2 and 3 cities to sign up maximum customers.

Besides, Paytm has planned to give away Rs 100 crore cashbacks in three days, thereby forming a solid foundation of brand loyalty for the future Alibaba’s marketplace.

Paytm is expecting to generate monthly sales volume of Rs 3000 crore, powered by this recent festive day sales along with 10 million transactions in three days.

And the results are already in: On the first day of sales, Paytm registered 3.5 million transactions, and 70% of the orders came from Tier 2 and 3 cities. As per a statement from Paytm, each customer is ordering 2-3 items. Total of 1.5 lakh sellers are participating in this three-day sales on Paytm.

Saurabh Vashishtha, Vice President for business and product management in Paytm’s ecommerce marketplace, said: “We expect 10 million transactions in three days. This year we have lined up total benefits of more than Rs 100 crore including cashbacks and discounts on three days of the Maha Bazar Sale.”

We had earlier reported how Paytm is bleeding red, on account of high losses incurred in their ecommerce business. Compared to Rs 372 crore loss in 2014-15, they incurred loss of Rs 1534 crore in 2015-16.

On the other hand, Alibaba has already introduced an avalanche of cheap Chinese products into Paytm’s ecommerce platform, thereby forming a solid base of their formal entry into the Indian market.

We will keep you updated as more details come in.

Do you think that Indian ecommerce will gain by the entry of Alibaba? Or the market will suffer due to highly competitive strategies used by Alibaba to gain market share? Do let us know by commenting right here!