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April 15, 2016
Richa Maheshwari, The Economic Times
Bengaluru, 15 April 2016
Paytm
plans an aggressive expansion of its online travel business by
branching out into rail, road, airline and tour bookings in order to
drive more traffic to its portal that is largely payments driven.
The
company has partnered services marketplace Ezeego1 for hotels and
flight bookings and is also in talks with several airlines. The online
player is also integrating the rail inventory of Indian Railway
Catering and Tourism Corporation on its platform.
“It is
becoming increasingly challenging for vertical players to drive
traffic. Whereas, horizontal players like Paytm have been fairly
successful in driving loads of it,” said Abhishek Rajan, head of travel
marketplace, Paytm. The company is planning to invest around Rs 120
crore on its travel marketplace in the current financial year.
A
horizontal player in the ecommerce space offers multiple shopping
categories such as books, apparel, appliances and more on a single
platform whereas, a vertical player specialises in one kind of
offering.
Paytm will earn a commission for each booking made
through its platform. The company launched its travel marketplace last
year and has restricted to book buses and hotels. It aims to roll out
adventure tours, inter-city cabs and overseas travel requirements such
as visa application and money conversion by the end of this year.
As
per a recent Morgan Stanley report, categories like payments, travel
and taxis saw an increase in total fundraising from 12% in 2014 to 44%
in 2015.
Last month, rival Snapdeal had integrated bus,
flights and food delivery bookings on the platform to drive up its
gross merchandise value. “Horizontals are looking at monetising their
user base with a focus on GMV and repeat use cases. As the funding
environment becomes tougher, growth in these metrics will stand out,”
said an investor in of the top three ecommerce companies.
Paytm,
however, is building a marketplace taking a cue from Alitrip, the
travel marketplace run by its investor Alibaba in China. “Our intention
is to continuously add new travel categories to the platform and drive
organic growth without making large marketing investments,” added
Rajan.
According to experts,
the strategy can ring in higher margins, too. “These services won’t
take up any extra cost in terms of physical space and there is no
delivery cost too. Hence, these players will make better margin out of
it while providing something new to consumers,” said Devangshu Dutta,
CEO at retail consultancy firm Third Eyesight.
A
report from the Internet and Mobile Association says that the total
value of digital commerce stood at Rs 81,525 crore in 2014, of which Rs
50,050 crore, or over 60%, was accounted for by the online travel
segment.
(Published in The Economic Times)
