When Paytm Mall started, it took a cue from its investor Alibaba and aimed to become a digital universe for everything.
As part of its initial offers, the company started giving cashback to attract customers.
to Pavel Naiya, Senior Analyst, Devices and Ecosystem at Counterpoint
Research, it was a short-term strategy and gaining royalty in the
long-term in a price-sensitive market like India was an uphill task
which depends on multiple factors, including service delivery, exclusive
offerings and additional product bundling, etc.
"As cashback disappeared, so did the customers," said Naiya.
Mall stopped fighting the low-margin, high cash burn e-commerce battle,
and began altering its strategy to become an O2O (online to offline)
platform for small sellers.
The announcement by Reliance to enter the fray was really worrisome for Paytm and its owners.
is working on creating the world's largest online-to-offline New
Commerce Platform," said Mukesh Ambani, Chairman and Managing Director,
Reliance Industries said at the "Make in Odisha Conclave" in November
With a deep footprint in over 10,000 Reliance Retail
outlets pan-India, Reliance has a definite edge over all other retails
players out there.
"Reliance has capital, an unending capacity to
scale up, massive retail footprint and resources to beat the
competition. Mukesh Ambani aims to become the top retail player in the
country and can easily do that like he has done with Reliance Jio,"
Satish Meena, senior forecast analyst at Forrester Research, told IANS.
thing that has always worked in Reliance's favour is their deep
discounting strategy and this will be the key differentiator with their
ecommerce platform too.
"Paytm Mall faltered owing to adopting a
wrong model. It is looking at a very difficult time ahead as unlike
China, India is yet to mature for the online-to-offline (O2O)
marketplace," Meena said.
Thomas George, Senior Vice President and Head of CyberMedia Research (CMR) went a step further.
will not be surprised if Paytm could be an acquisition target for
Reliance or Alibaba to pursue their India e-commerce business
opportunity," George told IANS.
Alibaba never saw long-term
growth in the e-commerce sector in India so they placed their bet on the
burgeoning digital payments sector which, according to Google and
Boston Consulting Group, will be worth $500 billion by 2020.
Paytm Founder and CEO Vijay Shekhar Sharma thought otherwise and the result is for everyone to see.
is looking at toppling Amazon and Walmart-Flipkart from their top
positions. Paytm Mall is just a small competitor in comparison," said