PayTM Mall or PayTM Bazaar
“The online marketplace business will either be called PayTM Mall or PayTM Bazaar,” said the person who estimates the business has annualised gross merchandise value (GMV) of about $1 billion. The closure of the deal is expected to be formally announced in the coming weeks. Paytm declined to comment.
A representative for Alibaba said the company regards India as an important emerging market with great potential and is absolutely committed to developing this market for the long term. “However, we do not in principle discuss rumours about our business plans,” she said in an emailed response.
For Alibaba, entering the Indian market will mark an expansion of its global footprint and offer a chance to grab a slice of one of the world’s most attractive markets for online retail, which is estimated to be worth $1416 billion at the end of 2016, up from about $11 billion in 2015, according to analysts and investors.
Alibaba was expected to be- gin business in India as Tmall, its business-to-consumer brand in China, in order to differentiate its business from Paytm’s digital payment brand. But the online marketplace will now continue under the Paytm brand.
ADVANTAGE IN B2B
Experts are of the view that Alibaba has an advantage in the business-to-business sector where there aren’t too many competitors.
“Also it has done very well in bringing small vendors to customers in China,” said Pinakiranjan Mishra, partner, EY India.
ET first reported the news of One97 spinning off its online marketplace unit as a way to facilitating the entry of Alibaba into the Indian market, in February 2016.
Regulatory filings made by Paytm E-commerce show that it has already issued shares to shareholders of One97 Communications, most recently to Alibaba and Alipay.
The latest transaction also marks the completion of the reorganisation of One97 into two distinct units — the payments bank Paytm Payments Bank Limited, and online marketplace Paytm E-commerce. This process began in August 2016. The ecommerce services business, which includes ticketing and offline payments at petrol pumps, will continue under One97, founded by internet entrepreneur Vijay Shekhar Sharma.
Paytm also transferred its wallet licence to the payments bank unit last year, which is expected to launch operations in the next few months. Sharma owns a 51% stake in the payments bank while the rest is owned by One97 Communications.
The latest deal, the first significant transaction in the Indian ecommerce industry this year, is expected to lead to a shakeout in the sector, which has witnessed a tough battle between Flipkart, Amazon and Snapdeal. Amazon has picked up marketshare with its aggressive spending even though the pace of growth has slowed.
“It is a great news for the industry as there is a large player to take on Amazon, and this could lead to acquisition of players,” said the founder of a vertical online retailer.