Paytm will unleash a shopping frenzy on India like never before, courtesy Alibaba

Indian ecommerce horizon is getting crowded every now and then, thanks to innovation fuelled entrepreneurs who are charging up the internet space. And joining the bandwagon is Paytm. With a backing from Alibaba, it is investing $600 million over three years to grow its commerce business.

Paytm is using this fund to integrate Chinese sellers from the Alibaba ecosystem on its mobile app that will offer products at rock-bottom prices. It has already launched its travel marketplace and will begin by selling hotel bookings through its app as well as website.
The pilot involving integrating of Chinese sellers would bring 10-crore products from Chinese companies on its app, with prices as low as Rs 3. Creating a "virtual China bazaar" could lead to further bleed at incumbents, who would be forced to offer further discounts to match, Sharma said.

Since beginning of 2015, Paytm has received $880 million in two tranches from Alibaba Group and its affiliate Ant Financial, for around 40 % equity. Separately, Alibaba has also invested in rival etailer Snapdeal for a small stake, raising concerns in some circles about conflict of interest.

Alibaba will bring scale and learning of profitability, besides sharing knowledge of growing the elements that bring profitability. With the world's largest ecommerce company's global influence of merchants, Indian consumers will get best prices and quality, he added. After the integration, consumers will be able to pay in rupee as opposed to US dollar, in which the listings have been done on the app. In order to take care of issues of trust and customer care, payments will go through consumer's Paytm wallet, which will ensure refunds, if the case arises. Paytm is also allowing bulk purchases for these products and consumers will be able to avail additional discounts or cash backs.

The One97 Communications owned company has set out a three-year plan during which it will spend about $600 million in commerce and payments, mainly for acquiring customers, increasing workforce, adding technology, marketing, trust building - returns, price difference, merchant catalogues and investments. The outlined investment is separate from the $500 million that Paytm wants to invest in acquisitions.

With a payment's bank licence under the belt, the company said it is set to achieve a revenue target of $700-800 million within three years from now.