One lakh Chinese sellers from AliExpress to join Paytm network from August


May 28, 2015

Varun Aggarwal, The Economic Times
Bengaluru, 28 May 2015

Paytm is set to allow 1,00,000 sellers from Chinese etailer Alibaba’s online shopping portal AliExpress to start retailing on its platform in India from August, a senior executive at the mobile commerce company said. The Delhi-based company, which crossed $1.5 billion (about Rs 9,600 crore) in gross merchandise value (GMV) during the year till April end, expects an additional $1.5 billion from AliExpress business alone in the next six months.

"According to our initial estimates, we’ll be able to double our gross merchandise within six months with the help of AliExpress integration," Amit Lakhotia, vice president-payments at Paytm told ET.

The development is part of Jack Ma-led Alibaba’s plans to grow beyond China. The company bought 25% stake in Paytm for $650 million (about Rs 4,160 crore) in February, giving it access to India’s $6 billion (Rs 38,400 crore) ecommerce market.

According to PwC, the Indian ecommerce market recorded 34% compounded annual growth rate between 2009 and 2014 to touch $16.4 billion and it is expected to cross $22 billion this year. The country’s online shopping market, a subset of the overall ecommerce market, is pegged at $6 billion.

"We are undergoing quite a complex integration with AliExpress, something we haven’t done in the past," Lakhotia said. "We are looking at various aspects such as legal and taxation issues, international logistics, customs, the process for issuing payouts to merchants and for refunds."

Lakhotia said customers will have an option to pay cash on delivery for all products they buy from Chinese merchants. "From a customer perspective, there’ll be no difference between an Indian and a Chinese merchant. We’ll be the one responsible for the logistics and customer care."

Paytm currently has 40,000 sellers in India, of which only 10,000 transact on a monthly basis. But the company expects to have 100,000 Chinese sellers right at the launch. This will require the company to scale up its infrastructure rapidly. Much of the $650-million funding from Alibaba is being used for this purpose, the company executives said.

Earlier this month, Alibaba CEO Daniel Zhang said the company will invest heavily in existing and new ventures abroad to become a global enterprise.

Alibaba is already setting up a cloud computing base in Dubai and is increasing its stake in US etailer Zulily. ET reported in March that the company is also working with Paytm to bring its mobile payment platform Alipay and its credit rating agency Sesame Credit to India, albeit with a local twist.

Experts, however, said that Chinese sellers might not find it easy to sell to Indian customers.

"So far we’ve seen a number of issues faced by Indian consumers trying to order something from China, including bad quality products being delivered to shipment not arriving at all. There is a big element of trust that needs to be fulfilled," said Devangshu Dutta, CEO, Third Eyesight. "Paytm will need to bridge the cultural gap between the two countries in order to be successful."

Paytm executives are extremely upbeat, though. "We have grown close to 10x in the last one year. At the current rate, we hope to cross $10 billion by the end of 2016," Lakhotia said.

The company’s wallet customers have increased from 20 million in January this year to 78 million in May. Paytm, which started primarily as a mobile recharge platform, earns about 40% of its GMV from ecommerce business and expects the share of ecommerce to rise. In November 2014, recharges contributed 80% to the company’s GMV.

Although Indian importers are already selling Chinese products on various portals such as ebay and Snapdeal, there is a gap between customers and suppliers that needs to be filled effectively, according to experts.

(Published in The Economic Times.)