PAYTM

CASE STUDY

Divyanshu Shekhar
 Agenda

• Goals and Objectives

• Overview

• Research Objectives

• Recommendations
Goals and Objectives

Here,

• First of all, we’re going to give you a brief summary/overview of Paytm’s current customer base and the
current travel business of Paytm along with all other datasets that we will further be using in our Case
Methodology and also talk about the company’s future goals and priorities.

• Here, we also define our research objectives and define the exact parameters we are going to focus through
Growth Strategy.

• Then align our Growth Targets with the numbers explained in the overview while validating them accordingly.

• Next, we identify the pillars that can support our Growth Targets .

• Finally, we recommend how the company can leverage/show go about these pillars.
Overview

Paytm is India's largest leading payment gateway that offers comprehensive payment
services for customer and merchants. They offer mobile payment solutions to over 7
million merchants and allow consumers to make seamless mobile payments from
Cards, Bank Accounts and Digital Credit among others.

They pioneered and are the leader of QR based mobile payments in India. With the
launch of Paytm Payments Bank, Paytm aims to bring banking and financial services to
half-a-billion un-served and under-served Indians. Their investors include Softbank,
SAIF Partners, Alibaba Group and Ant Financial.
 1. Paytm customer base

The current consumer base for Paytm is around 150 Million. It will invest Rs.750 crore to approximately double
its monthly active user base on mobile to 250 million in this fiscal year. The company expects its Paytm Inbox
service to accelerate the growth as it has garnered 27 million monthly active users and expects additional 60-
70 million new customers to come on board by end of the current fiscal year.
2. Market Share
3. Market Share in terms of Transactions
4. Market Growth in terms of Merchant Transactions

Paytm is India’s largest payment network with 16 million merchant partners

5. Paytm’s Travel Business

• With a customer base of more than 16 million and annual GMV of $1

billion, Paytm has quickly risen to become a leading online travel
booking destination in India.

• It’s travel business has been among the fastest to sell over 100 million
tickets within just 3 years of operations.

• In addition to this, Paytm sells more than 6 million travel tickets every
month and are targeting to grow by 100% in the current financial year.

• Since its inception, Paytm Travel has launched several product

innovations like FREE Cancellation that starts as low as Rs.99 for flights
and Rs.3 for bus, zero cancellation-processing fee on flight tickets and
instant refunds among others.

• Paytm users have saved more than 60 crores from their free
cancellation feature on flight and bus ticket bookings.

• They are perhaps the only player in the travel industry that doesn’t
charge a fee for processing flight ticket cancellation requests.
6. Competitior Analysis

• In the online travel segment, Paytm’s biggest competitor is are MakeMyTrip, ixigo, and Yatra, among others.

• Recently, online travel company Yatra expressed its intention to raise $100 Mn capital in the next three years.

• Prior to this, MMT posted result for the year ending December 2017 and recorded an overall revenue of $172.5 Mn, up 36% YoY from
$123.2 Mn in the corresponding period of the previous fiscal year. Due to increased expenses following MakeMyTrip’s merger with
Ibibo Group, the Gurugram-headquartered online travel aggregator witnessed a jump in losses to $45.3 Mn in Q3 of FY18.

• The country’s travel market (both offline and online) is expected to touch $48 Bn by 2020, according to a Google India-BCG report. As
per an IBEF report, the online travel space will likely account for 40% to 50% of total transactions with 2020.

• Paytm has already achieved a run rate of 1 Bn transactions per quarter, recording a four-fold jump in its annualised gross transaction
value (GTV) to $20 Bn (INR 1.3 Lakh Cr) in March 2018.

The Biggest Competitors of Paytm in the market do not provide the depth and width of the product mix that paytm
provides. Hence, Paytm has a huge base of customers already. All we need to do is market our travel product line
more strategically in order to have customers check it out and once they see that we are providing more value to the
customers, they’ll surely buy tickets from us.
• MMT as we know is a complete app for travel
bookings and hotel bookings etc whereas paytm
provides a lot more services in comparison to MMT.

• The gross value of bookings for paytm in FY’18 was

more than $1 billion dollars.

• We have more tier 2 and tier 3 penetration and also

85% of the app purchases which MMT doesn’t.

• We have to move beyond the cashbacks and offers and

focus on more tech development to attract customers in
huge numbers. MMT provides all in one bookings and
we need to focus on that and provide better.

• The usability of Paytm is much higher than MMT and

we have to leverage that to create more opportunities
and attractions with respect to the customers.
Company’s Approach
“We intend to reach every inch of the country and en-route, empower small enterprises. We commit
to operate in an economically, socially and environmentally responsible manner. We hope to use
our influence to garner financial & other support for disaster victims & the underprivileged.
We do our best to compensate negative effect on the environment. We wish to share our technical
knowledge with the deserving to empower them.
We believe in providing equal opportunity for all our people, as well as those whom we come
across in our course of work.”

RESEARCH OBJECTIVE

Paytm has to grow to 3 times the current levels in Flights and Buses and 2 times the current levels in
Trains. Given that Paytm is already one of the top 3 players in all the three categories, this shift is not
that easy and the targets are really aggressive.

As Consultants, we have been hired to suggest growth hacks to drive that growth.
 GROWTH STRATEGY
GROW SALES

EXPLORE EXISTING EXPLORE NEW BUSINESS

BUSINESS
(PAYTM)
(ELIMINATED)

INCREASE VOLUME INCREASE

PRICE
(ELIMINATED since targets are really aggressive)

INCREASE INCREASE BASKET

CUSTOMERS
Framework Bucket

Suggested buckets for a framework for this case include:

Organic Growth –

Same Products, Same Markets

• Improve the customer experience

• Invest in new tech to attract and retain customers
• Hire more staff to accommodate the need for proper execution of tech advantages provided by Paytm
• Increase no of collaborators through effective B2B
• Increase marketing efforts
• Upsell and Cross-Sell

Inorganic Growth --

• Acquire Small and Local Companies to quickly gain market share and generate synergies
• Expand Business Overseas
 New Market Segmentation

• From the growth strategy chart, we can clearly see that our main focus is towards increasing and retaining
customers. We eliminated the options of new business opportunities due to already existing business. We
also eliminated the case of increasing price as the market is highly competitive and increase in price can be
one of the major reasons why we would start losing more customers.

• To increase our Growth Sales by 3 folds in the Airline and Buses Sector and 2 fold in the Trains Sector, we
first need to look at gaining more customers in the 2nd and 3rd tier cities. Paytm already has a customer base
of around 150 million people in which 85% of the people belong to the tier 2 and tier 3 cities.

• The new customer base amounts to around 65% of the users signing up on the platform from the 2 nd and 3rd
tier cities and it shows that the market is still a growing one and needs to be carefully looped in.

• Paytm has announced its plan to invest Rs 250 crores in their travel business over the next six months. This
investment will be used towards scaling up the technology team, setting up new business verticals and
growing the market share in existing travel categories. These resources need to be planned and executed in
a lively and organized manner to attract another 80-90 million customers in this fiscal year.

• Paytm is all set to establish its market in the United States of America. The company which already has
140 million active users across the globe is all set to invest Rs. 750 crores in the US market.
paytm revenue structure

Now let me give example about travel

■ Each travel company gives about (1.5 to 2.5 % ) of amount to paytm due to transaction.

■ If paytm is providing 10% discount, a travel company through which the tickets are booked has to give 80-90
discount from it’s pocket to customers.

■ Paytm is currently doing this to get people addicted to the app.

■ So that in future, while booking, any customer would first think about checking paytm.

■ About 6 million tickets are being booked every month with a consumer base of 16 million and an annual GMV
value of more than $1 billion.

■ IF THE CUSTOMER BASE RISES TO ADD 15-16 MILLION MORE BY ADDING MORE CUSTOMERS FROM TIER 2
AND TIER 3 CITIES AND ALSO THROUGH GLOBAL CUSTOMERS, IT’D BE HIGHLY SIGNIFICANT IN
INCREASING THE GMV TO MORE THAN $2 BILLION
Growth Strategy for Air tickets and Bus Tickets

Paytm had a market strategy divided into 3 segments after 2015

• The first 3 years were about market entry, consolidation and customer engagement

• The second 3 years (present) is about growth in market share and customer retention to reach break-even point

• The third stage would be about revenue generation

Paytm has also allocated Rs. 250 crores in the Travel Business which is to be used for Market growth through
technology etc. So, let’s look at a few strategies that can be adopted.
 1. AUTOMATIC BAGGAGE COLLECTION-
The major pain point for any air traveler is where they have to stand in a queue to submit their baggage. Many
other websites offer services like web check-in and online boarding pass collection but what if Paytm innovates
their own baggage collector at airports.

Any person, no matter which flight he chooses, if has a ticket from Paytm, He can enter the airport, go to the Paytm
baggage deposit counter. Checks himself in through the PNR, and submits his baggage after weighing it through the
automatic weighing platform which would be connected to the display monitor. If he has exceeded the baggage
limit, he can pay directly through his Paytm wallet then or later as the amount will get reflected in his Paytm
account. Then the Paytm staff at the airport can arrange the baggages according to the flight.

This will not only save passengers from the hassle but would also allow them to quickly move in the airport for
further processes.

Today people want the processes to be less time consuming and due to this feature, Paytm can retain a lot of
customers from other companies as responsible delivery and automated processes will attract customers to choose
Paytm rather than choosing other platforms.

This will not only help in customer retention as we already have 300 million registered Paytm wallets but will also
help in attracting customers to get tickets from our platform rather than our competitiors’.
2. Paytm has already partnered with bus ticketing software provider INFINITY. It is a travel focussed technology
provider, which provides fleet operations & inventory management software and technology solutions to bus operators
and logistics companies. It also offers live vehicle tracking through GPS, travel booking platform for offline agents
and in-bus entertainment system through its proprietary MagicBox hardware and software solution.
‘Magic Box’ is currently implemented in more than 700 buses in India and has received Excellence in Innovation
Award in Prawaas 2017.

Paytm can implement this in tier 2 and tier 3 cities to gain customers looking for luxurious travel in affordable prices.
Once Paytm has the market growth the sales will grow up significantly due to decrease in competition.

3. Providing Bus Services in Tier 2 and tier 3 cities with direct connectivity to the nearest airport. Various smaller cities still
aren’t connected to the airports and hence would be highly beneficial if Paytm connects them through partnering with
local bus companies.
In a media statement, the company claimed that more than 85% of all travel bookings come from the app, and its
travel offerings are vastly popular across the metros, mini metros, as well as tier II and III cities such as like Jaipur,
Indore, Vizag, and Lucknow among others.

Paytm already has partnered bus services of 9 state road transport corporations. The ones on the listings are Andhra Pradesh
State Road Transport Corporation (APSRTC), Rajasthan State Road Transport Corporation (RSRTC), Gujarat State Road
Transport Corporation (GSRTC), Orrisa State Road Transport Corporation (OSRTC), Tamil Nadu State Transport
Corporation — State Express Transport Corporation (TNSTC-SETC), Maharashtra State Road Transport Corporation
(MSRTC), Puducherry Road Transport Corporation (PRTC), Jammu and Kashmir State Road Transport Corporation
(JKSRTC) and Uttar Pradesh State Transport Corporation (UPSRTC).

It should continue partnering with more to attract a huge customer base.

Growth Strategy In Train Bookings
Until 2017, IRCTC was accessible only on a desktop or laptop computer. It did not
have a mobile application, thereby missing out on a big chunk of potential
customers.

Paytm believes that the deep penetration of its app in tier 3 and 4 towns has helped
in introducing online train booking experience to newly online users.

It added that more than 95% of the train bookings come from the Paytm app. “We
believe these are app first or app-only users that may not have access to a
desktop/laptop hence might have never accessed any website for train booking.

Many of these users have probably booked their first online ticket on Paytm. We
are therefore looking to grow the online train booking market size by bringing more
offline users to the online channel.”

To have a 2 fold growth in Train Tickets booking, we need to make sure we can make the paytm
booking process as smooth as possible. We need to have marketing strategies for the benefits of
the online booking through paytm displayed in tier 2 and tier 3 cities where we can have more
agents booking tickets through our platform and gain their concessions accordingly. We also have
to make sure that proper carrying facility is also provided to the customers choosing to book tickets
from Paytm.
RECOMMENDATIONS
• The main objective is to increase customers through the introduction of new technologies to make travel smooth
by attracting customers through processes such as Automatic Baggage Collection at airports,

• Buses connectivity from tier 2 and tier 3 cities to the nearest airports and railway stations.

• Establishing the market in tier 2 and tier 3 cities by partnering with local bus services.

• Expanding business overseas (The U.S) is a good idea which will not only give Paytm a global appeal but a
chance for more B2B Collaborations.

• Creating a herd mentality among customers to have a fear of missing out by marketing new technologies and
their benefits.

• Upsell and Cross-Sell by building the travel packages with attempting to target every tier cities through
customized packages.
• As, Digital Payments are still expected to grow to $1 trillion by 2023 compared with $200 billion in 2018,
according to a 2018 Credit Suisse report. Paytm has established a monopoly, it needs to retain customers on its
Unified Payments Interface (UPI) platform as well. So marketing should be done regarding that.

• Paytm which recently launched "All in One" solutions helps offline merchants accept payments even remotely.
This, according to industry insiders, is finding many takers among businesses as more merchants and users are
coming on board for digital transactions. This will have to continue to allow remote agents to book tickets from
remote places as well and thus entertain a lot more new customers.

• Currently AEPS has crucial role to play to provide access of DBT fund from the account. Players like Airtel
Payments Bank have already rolled out the service, it is recommended that PayTm Payments Bank forays into this
segment as majority of rural customers can be targeted directly with this offering and be brought on the platform.

• Generalise the use of Magicbox hardware and software solutions to improve facilities inside buses.

• Building a simpler user interface with very specific features for Rural/ Non-Tech Savvy users with big buttons on
home screen for important features and having a ’More’ option separately - Paytm Basic

• Continue with seamless transactions for ticket booking and make it more feasible through connecting it to the
paytm wallet and then giving the consumers an option to choose from pay now or pay later. Since, the wallet will
be linked through KYC, it won’t suffer losses but since people are addicted to using Paytm they’ll pay.
THANK-YOU