India's Taobao: Paytm launches zero commission marketplace

New Delhi: Desi Taobao? Why not? Paytm, the online payments platform backed by China’s Alibaba Group, today climbed on to the m-commerce platform by launching a dedicated app for sellers.

Chief Executive Vijay Shekhar Sharma said “why not” when asked if he was trying to launch a desi version of the Chinese marketplace Taobao. Taobao has also been promoted by the Alibaba Group in China. With this foray into m-commerce, Paytm is throwing an open challenge to big daddies like Flipkart and Snapdeal - these marketplace companies charge the sellers a commission while Paytm says its model is based on the zero commission concept.

“This is our move into mobile commerce,” said Paytm’s Sharma, adding the mobile app was designed to connect small businesses and consumers.

Sharma is nothing if not ambitious. He threw about numbers and claims which sound fantastic. So after the seller app launch and because of its zero commission model, Paytm expects the number of merchants on its network to more than triple to a lakh by December from about 30,000 now. And to 10 lakh by the end of next calendar.

That Paytm is challenging the behemoths like Flipkart is good news for consumers but some questions remain: how will it help logistics of merchants on its network and how will it address problems like return or refund?

Sharma says merchants stock their own inventory, will do their own deliveries but can sign up with partner logistic companies to get better deals. He also says till the merchant’s own commitment on return or exchange is valid, the payment made by a customer will stay in an escrow account. Another large number is thrown in: Sharma says from just 8.5 million SKUs (Stock Keeping Units) which merchants offer on the Paytm network now, the number will jump more than 10 fold to 100 million by December.

From just marketplace activities, Paytm claims to earn revenues of over $500 million now but Sharma says this will jump to $2 billion by December. In fact, he says half of Paytm’s run rate will then come from the m-commerce marketplace push.

Paytm has yet to turn in a profit but Sharma says he is not chasing profitability yet. Erik Jing of Alipay, the Alibaba Groupo company which now owns 25% of Paytm, also echoed these sentiments when he said that instead of eyeing profitability, Alipay was keen on expanding financial inclusion in India through Paytm.

“We don’t care about profitability. We care about SMEs, users on the Paytm wallet,” Jing said.