Case study on Paytm Pay-Through-Mobile Revolution in India Paytm Pay-Through-Mobile Revolution in India a ay Pa Paytmis one of the fastest growing Indian e-commerce shopping website. Butthis is not the Paytm was exactly when it was foundedin 2010. Paytm was founded as prepaid mobile recharge website, But now the business has diversify themselves to many other sectors like utility bill payment, wallet payment, wallet to wallet and wallet to bank transfers for many leading internet based companies in India, shopping, discount coupons etc. Company Profile Noida-based mobile commerce platform wasincubated by One97 Communications. The idea was actually implemented by Vijay Shekhar Sharma. The app downloaded on various platforms has touched the mark of 7 million. They have over20 million registered users and 26 million transacting. users who pay online. The additional features added like Bargain powerwhichisnot currently available at any other marketplace and unified dashboard has made the selling and buying more interesting for users. They do 400,000 orders per day, whichis secondhighestin the country afterIRCTC. At present, ‘the companyis doing $1 billion Gross Merchandise Value (GMV) with only 15% customers choosing Cash on Delivery (COD) option. Paytm is also available across many popular mobile apps (like Uber, Bookmyshow, Homeshop18 MakeMyTrip, Naaptol and FoodPanda) as preferred payment method. Different Business Diversification from Prepaid Mobile Recharge Businessto E-Commerce Every Indian lovesto bargain, andno Indian can resist when they get their trusted mobilerecharge app as aplatformto letthem buy things on bargain. Yes, Paytm offers bargains to shoppers purchasing All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.dothing, shoes, accessories and other goods. InFebruary 2014, they launched its mobile based marketplace and now recently has launchedaseller dedicated app with zerocommission model. Their website and mobile app has been transformed into a full-fledged e-commerce marketplace offering categories fromelectronics, mobile phones, sports & health, home &kitchen, books, baby & ‘toysand many more categories. Theirvision for setting upthe ecommerce business is toremove the middlemen andallow SMEs (Small & Medium Enterprises) to sell their produce directly toconsumers through the online platform. These SME even indudes boutique producers and small manufacturer. They have about 40 million registered SMEs in india. They are tryingto anchor their platform onkey utility monthly needs of the consumer like energy, transport & communication. 25,000 merchants are actively registered with Paytm, Company Milestone \Noida-based mobile commerce platform was incubated by One97 Communications as mobile recharge website. The idea was actually implemented by Vijay Shekhar Sharma, They launched mobile based marketplace offering categories trom electronics,mobile phones, sports & health, home & kitchen, books, baby, toys and many more Alibaba the biggest & most valuable ‘ecommerce campany bought 25% stake in Paytm with ihe Vision of entering into the Indian Market. The mobile recharge & Ecommerce Company got about $575 milion from i. In the same month, India's leading investor and businessman Ratan Tata has also invested an undisclosed amount in the company, Paytm started their bus ticket booking business toa. They are booking 20, 000 bus tickets @ day now. Business Model for their E-commerce According to the founder of Paytm, Vijay Shekar Sharma, they are differentthan any other marketplace out inthe market. They provide 3 extra tools forthe Indian Merchantsto help them to grow. The 3 tools are talking to the merchants, catalogue management- giving those insights about consumers, analytics 2 All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.and feedbackon their storefrontand lastly marketing: where merchants can be come partof Paytm promotions. Apart from it Paytm doesn’t provides the logistics service to their merchants. But they solve ‘the merchant's problem of bygivingthem customers intheir vicinity. And evenif they are sellinginthe remote areas, they already have their logistics cloud with data of multiple logistics companiesin it. Zero Commission Mobile App Marketplace for SME's Recentlyin April has now come up withthe Seller App witha zero commissionmodel. Whatthis means {is that sellerson the platform don’t need to give a commission to Paytm an sales. Merchants keep all of what they sell. Other marketplaces like Fliokart and Snapdeal work on a commission based model Paytm this move is like what Alibaba Group's Taobao works on. Taobao is an online marketplace in China operated by the Alibaba Group that started working on zerocommission concepts. Walletapp Paytm has also launched a wallet app which allows users totransfer money betweenthem. This wallet essentially lets you store cash digitally, which can then be used for mobile and online transactions. The company further revealedthatit now had more than 12 million users makinguse of the Paytm Wallet service, Railway Ticket Booking Business Paytmhas also contracted with IRCTC to make Paytm walletas one of the online paymentoption while booking a ticket. IRCTC processes around 180 million transactions every year; and Paytmhasa strong base of 60 million wallet users who can use their wallet instead of using plasticcard details. These wallet holdershave anaccess to shopover the app and pay with Paytm wallet across 21,000 merchants, Bus Ticket Booking Business ‘After getting fundings from Business Tycon- Ratan Tata and Ecommerce giant- Alibaba, Paytm started their bus ticket booking businesstoo. They are booking 20, 000 bus tickets a day now. And their booking partners found that they are moving offline business to online, noteating up theirmarket. ‘immediate Payment Service’- Funds Transfer Business In March 2015, Paytm announced theirnew feature that enables users to transferfundsinto any bank account. The system, calledthe Immediate Payment Service, enables usersto transfera maximum of 5,000 India rupees ($US80) per day and up to 25,000 rupees per month. Paytmwill allowa minimum ‘transaction at 1,000 rupees, but the senderneeds tohave at least 2,000 rupees incredit associated with theiraccount. Paytmusersmusthave their mobile number or email verified and they should be registeredon the system forover 45 days in order to use the service, accordingto the company. Grocery Deliveryin Bangalore Paytm has recently joinedin the hyper-local venture by starting grocery delivery in Bangalore. The hyper local market has raised more than $60 million over the past two months from various venture apitalists, Funding From Alibaba In feb2015, Alibaba- the biggest & most valuable ecommerce company bought 25% stake in Paytm with All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.the vision of enteringinto the Indian Market. The mobile recharge & Ecommerce Company got about $575 million from ALibaba. The deal with Alibaba has helped Paytm to buildthe payments ecosystemin India. Ituses the funds to grow its mo! payments business andits commerce user base. Funds were also used for improving technology for mobile operations, a platform for aggregating couriercompanies ‘to ensure deliveries countrywide, customer acquisition and marketing activities. Funding from India's leading Investor- Ratan Tata Inthe same month, India’s leadinginvestor and businessman Ratan Tata has also invested inthe company. Paytm will utilize the fund inrecruiting freshtalent, acquisitions, marketingand brand building. How they Make Money? How they Make Money? Thereare three business models for generating revenues — 1. Commissions fromtelcos/DTH providers for each rechargedone on thesite, 2. Assmall fee from customers when they opt for coupons and 3. Fees from merchants who comeon board. The merchant model varies, though. While somepay for listing their coupons, others pay for distributing those andso on. Interestingly, merchants account for the largest share of the company’s revenues (50 percent), followed by customer fee for coupons (30 per cent) while recharge commissions come last(20 percent). Thisis understandableas the margins inthe recharge business happen to be low. In fact, it lies inthe range of 05-1 per cent. International Expansion In Dec 2014, the mobile commerce platform has has announced its plans to foray into international markets of Singapore & otherSouth-east Asian States. The company says that they choose SouthEast Allcontents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.Asian markets ike Indonesia, Thailand and Malaysia, as they see great opportunity forpayments on-the- 0 viathe Paytm Mobile Appin this region. Paytm intends to bring, tothese markets, their appdriven convenienceof paying for utility bllsin the firstphase, and will cater primarily toareas such as bill payments, transportation, parking, metros etc. The company aims toreach upto two million customers inthe first yearof operations. Paytm has yet to tum in a profitbut Sharma says he is not chasing profitability yet. Erik Jing of Alipay, the Alibaba Group Company said, “We don’tcareabout profitability, we care about SMEs, userson the Paytm wallet.” Alipay was keen on expanding financialinclusion in india through Paytm Their target this yearisto bring 1,00,000 merchants on their platform. Overthe next sixmonths, the firmisalso considering at 25,000+ tickets per day using PaytmwalletonIRCTCplatform. Accordingtoa report, “Paytm dlaimsto eam revenues of over$500 millionnow butSharma says this will jump to $2 billion by December 2015. Half of Paytm’s run rate willthen come fromthe m-commerce marketplace push All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.Facts & Figures ‘Orders/day Users make use of Paytm Wallet MT ET Merchants Registered GMV Registered users Transacting users ‘Figures nits All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.Refi asian-markets/ http://www.medianama,com/2015/03/223-most-of-the-marketplaces-in-this-country-have-a- dormant-merchant-base-vijay-shekhar-sharma/\ http://vourstory.com/2015/03/paytm-funding-ratan-tat: Allcontents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.