Institute of Management, Nirma University

MBA-FT (2019-21)

RETAIL MARKETING

Group Assignment-1 on
“Value Proposition and Business Model of Paytm”

SUBMITTED TO:
Prof. Sapna Parashar

SUBMITTED BY:
S.NO. NAME (Div A) ROLL NO.
1 Debaleena Mazumder 191115
2 Chahak Jhamtani 191218
3 Prakhar Pareek 191239
4 Sonal Gupta 191355
5 Chahat Goyal 191413

Date of Submission – 19 August, 2020

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 Table of Content

S.No. Contents Page No.

1 About the company 3
2 Value proposition of Paytm 4-6
3 Business model of Paytm 7-13
3.1 Target customer segment 7
3.2 Distribution channel 8
3.3 Market strategy 9
3.4 Core capabilities 9
3.5 Partner network 10
3.6 Cost structure 11
3.7 Revenue model 12
3.8 Competitive advantage 13
4 References 14

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A. ABOUT THE COMPANY
Paytm is India’s largest e-commerce and e-wallet platform based in Noida, Uttar Pradesh, India
which initially started out as online mobile recharge platform in 2010. It has gradually shifted its
model to marketplace and virtual bank model and is known to be the pioneer of “cashback model
system”.

Key activities of the company

The key activities of company involve providing services such as mobile payments, digital
wallet, online shopping, payment systems and banking facilities.

Initially, only services such as DTH and mobile top-up were available on the platform. Later in
2013, options like paying fixed bills, postpaid payments for mobile bills, etc. have been added to
the platform. Paytm Wallet was launched in January 2014 and has been incorporated by Uber
and Indian Railways as an online payment option on their platforms. The company also
introduced booking options for movies, events and amusement parks in 2015. In 2017, Paytm
reached a milestone when the company's app reached the achievement of 100 million downloads
applications. With this it became the first Indian app to achieve this goal. In this year, they
launched Paytm Mall app that gave the benefits to the customers in terms of online shopping.
They also founded Paytm Money this year where they offer investment execution and advisory
services to investors by providing direct benefits of mutual fund scheme.

Fig 1: Various services provided by Paytm

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B. VALUE PROPOSITION OF PAYTM
Paytm's underlying offer tackled this issue of under-banking and trouble in reviving by giving a
stage that was very simple to use to top up cell phone credit. This attention on ease of use
implied that Paytm turned out to be well known than the websites of other operators for phone
recharge. The second point in the value proposition was to transform this into a banking
framework. PayPal offers comparative service yet 99% of its clients have a bank account. In
2010 65% of Indians didn't.

1. Merchandising – Since we are talking about a E-commerce site so as in traditional retail the
store is responsible for the sales of products similarly for the e-commerce companies they are
depended on the website and the layout. Paytm’s website is user friendly and provides many
offers and recharge options.
2. Supply Chain – Paytm’s marketplace i.e. Paytm Mall has implemented an O2O (online to
offline) model where in it will use the local retailers for the delivery of its products. In this
model local retailers are not only responsible for delivery but for the sourcing as well. It has
ensured time saving as well as cost cutting.
3. Layout – Layout of the Paytm website is user friendly and provides one stop destination for
recharges, bill payments, booking tickets and purchasing goods through the Paytm Mall.
Offers are easily visible on the first page of the website

Fig 2: Layout of Paytm website

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4. Price – Pricing decision is an important part of the value proposition of the company. Paytm
is free to use service as it is a medium through which we can make payments. There are a lot
of investments done into Paytm due to which it is able to provide the free service. Besides
this it also provides many offers and discounts to the users and the existing customers so that
they remain loyal to the company. Similarly, its marketplace “Paytm Mall” provides products
at a discounted price which lures the customers to but from it.
5. Format – Since it is an e-commerce retailer, it will come under online retailing. All the
transactions are done through the Paytm website or mobile application. Besides its own
website, it has partnered with many clients and vendors as well. The advantage of an online
retail is that it offers many businesses such as recharge, bill payment, ticket bookings and a
marketplace.
6. Promotion – Their advertising and promotion campaign with the catchphrase “Paytm Karo”
helped this e-commerce company to become a household name in India. This got so famous
that the young kids even imitate the way this phrase is pronounced in the Ad campaigns. The
biggest promotion the brand has gained recently is due to the sponsorship with the Indian
Cricket Team.
In the recent two years after Alibaba invested, the focus now is on to move well beyond just
an online payment service provider which is offered on various websites. Paytm is
progressively attempting to move merchants onto its site making a closed ecosystem.
Fig 3: Various promotions and deals provided to the customers

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7. Location – Paytm is owned by one97 communications whose headquarter is in Noida, Uttar
Pradesh. As it is an e-retailer, anyone, with an active internet connection on mobile phone or
laptop can use it from anywhere. Also, Paytm is used by many offline retail stores and chains
as a payment option.
8. Human Resource – The estimated employees of the company are 20,000. The company
boasts of an autonomous work culture with an opportunity to grow. The hierarchy is just for
workflow and anyone can reach out to the top management. Besides salary various perks are
also provided to the employees. Openness and transparency are the 2 pillars which the
organization believes in.
9. Customer Relationship Management and Loyalty – Paytm strives to build good
relationships with its customers. For this reason, the company has a customer service center
that operates 24/7 to contact customers and resolve their questions or issues. The functions of
the app and the app itself are easily accessible. They are therefore easy to use for customers.
There are also other factors such as reliability, engagement, conversation, and dealing with
customer issues that Paytm provides to its customer. Reliability includes the reliability of
your products or services where a defective product can be returned easily and a refund will
be issued immediately. The payment gateway is also secure so that the customers feel secure
with the transactions. Responsibilities include the company's commitment to provide high
quality services with many benefits such as discounts etc. Managing customer issues includes
how customer inquiries are resolved and how quickly they respond to resolve customer
issues. These factors are seen as a direct function of customer loyalty.
Fig 4: Customer support services provided by Paytm

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C. BUSINESS MODEL OF PAYTM
Fig 5: Business model of Paytm

(source: bstrategyhub.com)

1. Target Customer Segments

Paytm was effective in targeting people with smartphones who were looking for cashless
payment transactions. They usually went for urban tier1 and tier2 young and middle-aged
people. Paytm's customer base consists mainly of mobile phone users. Many Indians wanted to
use the Internet for business purposes, but for various reasons it did not go well. At that point,
Paytm hit the market as a great option and people jumped on it. When it came to the promotions
and cashbacks, Paytm targeted the youths where they lured them by offering exclusive benefits
that was way above the regular offers such as deals on Zomato Gold memberships, shopping
lifestyles, video music streaming, travelling, UberEats, Oyo and etc.

Paytm have been a strong supporter of MDR (Merchant discount rate) and believes that no MDR
will impact the digital payments adoption market. As an industry, they need to discover new
business models. So, they asked the banks to support the industry. But Paytm Group has its own
bank. It has 52 million customers and has a turnover of 1.5 billion pounds sterling. A profit of

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Rs100 million has been made over the past nine months. Their bank has served their customers
without the need for bank branches. About 60% of their clients are very active.

2. Distribution Channels

Paytm, similar to some other application or site, is available wherever through a cell phone or PC
having web availability. The Paytm office is headquartered in Noida, India. The service is at
present serving the Indian buyers and is accessible all through the nation for making payments
and shopping.

Paytm is broadly acknowledged as a method of payment across different ventures, divisions and
geographies. A few cafés, restaurants, markets, lodgings and so forth all acknowledge Paytm as a
payment service. Paytm is also used by the tour operators and the ticketing agents for plane, rail
and bus tickets. All these show the broad reach of the administration, which is generally
acknowledged by sellers and clients alike.

Fig 6: Distribution channels of Paytm

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3. Market Strategy

Since the very start of the company the founders have focused on differentiated strategies, the
company focus on all the segments of the society. After demonetization it has gained the boost
because the e- wallet eased the problems faced by people who were short of cash.

➢ Product: Paytm provides various services like e-wallets, online shopping, payment of bills,
booking tickets etc. and hence has covered all the segments. The customers can also connect
their bank accounts with Paytm and manage the bank transactions as well.
➢ Price: The company provides free service to its customers as they do not charge for the
transactions done through Paytm. They also provide discounts to their customers on
transaction and on shopping as well and attract the customers. They also have various
cashback offers. They have their earnings from the transactional fee and commission charged
from their customers and the money which is stored in the e-wallets generates interest which
is an income for the company
➢ Promotion: Paytm has done promotions through launching ad campaigns and showcasing
them on different platforms such as Billboards, Newspaper, TV Commercials, Social media
etc. its campaign of Paytm Karo became very popular. The company also sponsors various
events like IPL. Various shops have their placards hanging outside the shops which promotes
Paytm.
➢ Place: Paytm can be accessed through smartphones and laptops with active internet
connection. The company headquarter is in Delhi India. Now every shop or restaurant or any
other commercial body accept Paytm and it has become very convenient for the customers to
move around without cash. It has also helped in the digitization of the economy.

4. Core Capabilities
a) Finding the Source of Problem: Paytm’s core business is to make the process of payment
go smoothly in a digital manner. They work on problems faced by customers and that in turn
expands their business. Initially, they solved the problem of recharging the phone instantly
online removing the hassle of going to a store. Similarly, they continue to add new features to
solve the problems faced by their customers like, booking movie tickets, travelling tickets,
buying grocery and necessary items and many more.

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b) Fixing the system: Paytm came into the market to change the way of payment system in
India. The Paytm founders decided to enter the business in order to solve this problem. The
major chunk of Indian population didn’t even have bank accounts before but Paytm has
brought a huge change in the country. People have been moving towards digital wallets as it
has become the need of the hour.
c) A super-app in the making: Paytm has become an application where people can do a lot
more than just payments. It has turned into an all-rounder digital platform. It has partnered
with various merchants over time and this leads to increasing Paytm customers as well. Once
a customer uses the app, they realize about other benefits of the app.
d) Creating markets: Paytm bridges the gap between banks and unbanked population of India.
Everyone is not educated enough to open the banks and get the benefits a bank provides.
Therefore, the rural population unable to get access to banking services use Paytm and are
becoming a part of this revolutionary change occurring in the country. It is helping those
users and banks by acting as the intermediary.
e) Driving Customer acquisition: Paytm helps the poor and illiterate population of India fulfill
their needs and become a part of the digital platform. Merchants get customers from areas
that were inaccessible to them earlier. Since banks can’t go and search for customers
themselves, Paytm does the work for them in form of an app which is available on any phone
with an internet connection.
f) Capital and Commendations flow: Paytm has no problem in surviving in the market as it
turns customers’ needs into opportunities for the business and introduce solution for it. This
has made many people vying to invest in the business and maintain their customers’ loyalty.

5. Partner Network
Paytm keeps an option on their website welcoming any merchant wanting to partner for
customers, advertisements or selling. That’s how Paytm has a huge number of suppliers and
merchants as its partners in running the digital platform smoothly for its users. Since Paytm
provides various services to its clients, they have to partner with experts in those fields to
provide mutual benefit. Key Partners include:
✓ Escrow Service providing Banks
✓ Mobile Operators

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✓ Vendors
✓ Movie Theatres
✓ NBFC
✓ Corporate Travel Companies
✓ Cable Operators

Fig 7: Various partners of Paytm

6. Cost Structure

Paytm caters to a large customer base which makes it follow an extremely cost driven model.
Most of Paytm’s expenses is related to maintaining the online platform and acquiring new
customers. Since, Paytm is an online platform and acts a gateway for transaction too, it has to
invest a huge amount of money for ramping up the security of its platform and ensure that its
huge number of customers (65 million) is safe from risks of money laundering.

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7. Revenue Model
Fig 8: Revenue model of Paytm

➢ Paytm Wallet: Paytm wallet is one of Paytm's most efficient services, forming a link
between the bank and retailers. The semi-closed wallet helps to pay taxes, purchase tickets or
pay for someone else. In addition to its earnings, as authorized by RBI, Paytm has the benefit
of receiving interest in a consumer store, just like any other payment gateway.
➢ Recharge Business: Paytm initially started off as a recharging platform and with time it has
established itself as one of the most efficient e-tailer with its exemplary services. It provides
seamless service without any errors and currently, it gains 2-3% per recharge. It is because
Paytm, by allowing its customer to continue recharging through their website, has greater
negotiating power than other vendors. That's why the commission it acquires is so big. The
commission from its recharging service acts as its revenue. These services have significantly
helped the company to expand its base and, in turn, to grow exponentially. When the
customer is pleased with the service or product, the consumer returns to the same business,
thus increasing its customer satisfaction and, as a result, attracting more traffic. Paytm has
used this approach to its benefit and continues to make a profit.
➢ Digital Gold: Paytm has launched Digital Gold in partnership with the well-known gold
refiner MMTC-PAMP which allows customers to buy or store gold in a digital platform and
with a minimum rate can get their gold delivered to their doorstep. The e-tailer has made
significant plans to encourage its customers to obtain their own Gold Bank accounts. Apart
from allowing users to purchase their gold, this account will also provide users with easy
access to other Paytm services.

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➢ E-Commerce Vertical: Paytm supports e-commerce or online products purchases. With the
opening of the Paytm Mall, Paytm has already diversified its online services. Paytm attracts a
number of retailers to its wide range of goods, such as shoes, clothing, etc., on its website,
which deliver products to you at an appropriate time.

8. Competitive Advantage

Competitive Advantage is the unique features, benefits etc. which the company offers to its
customers compared to the competitors. Following are the advantages offered by Paytm-

a) Ease of Onboarding Merchants: The merchants can sign up easily without the need of
connecting their bank account. They can make the transactions through Paytm wallet. Hence
it became easy for the merchants to register and transact without cash.
b) Viral distribution: The Paytm app gives its customers option to send money to people who
don’t have their accounts on Paytm. The receive within receive an email saying that they
need to register to avail the amount and hence the receivers had to make the account. This
strategy was adopted by PayPal and copied by Paytm. But the competitors who then came
after Paytm have not adopted this strategy.
c) Salesperson: Paytm hired sales person who would move door to door to houses, shops etc.
and ask whether they have their accounts on Paytm and if they would like to open one. There
was an extensive sale going on. The company had even hired sales person to promote the
paytm to the Uber Drivers and insisted them on opening their Paytm accounts.

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REFERENCES

• https://bstrategyhub.com/paytm-business-model-how-does-paytm-make-money/
• https://www.medianama.com/2020/07/223-paytm-stockbroking/
• https://www.denis-oakley.com/paytm-business-model-canvas/
• https://cdacmohali.in/paytm-business-model/
• https://home.kpmg/xx/en/home/insights/2019/09/paytm-solving-problems-to-create-
opportunity-fs.html
• https://paytm.com/about-us/partner-with-us-2/

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