Why PayTM Mall’s offline to online foray may not work in India

Indian retail is dominated by SMEs

I was recently going through this article in Medianama about Paytm Mall plans to get inventory of local stores on their platform

Though on paper it seems like a great idea of improving discovery of local shops, here are few things which need to be taken care of.

  1. The retailers in the small shops don’t have organized data about their inventory. Getting them online by manually scanning every item would be cumbersome.
  2. For categories like electronics, people who currently buy offline — is because they want to experience the product or don’t trust e-commerce. Why should they buy from Paytm mall site, when they can pay the vendor directly. The only way this can be forced is if Paytm starts giving cash back for shopping from their site. Then how long such cash backs can be given is questionable
  3. It might be that the actual aim of Paytm is to get more users transact on their platform, and hence acquire users who would otherwise not use Paytm. This may be a good play for Tier 2 cities, but again the question is what the CAC for these customers who have been so incentivized
  4. Why would some one book before buying? Does the customer need to pay money to get booking done — in that case very people will do. If it is free, then what is the meaning of booking? Why would a shopkeeper not give the product to a person who is paying him cash now?

Though I agree that there is a big market out there of organizing the offline retail world, but trying to get inventory of all offline products may not be the best way to go about it. We at TapDiscover are trying to take a slightly different approach of getting retailers to reply on chat to enable discovery and discussion. Of course it works only for those categories where people search a lot before buying e.g. in ethnic and occasion wear, furniture and even in home decors.

But this needs to be solved, and I don’t think 10 yrs from now, people will be going to each shop and physically finding about it. There needs to be a better way.

Shopping would be more of an experience, and move more towards experiential features — like movies or parks, where we go for the experience not search for something. But going out in the physical world to find out which products are there in which store, just seems too tedious to not have been solved in future.

Most of the research would be done online and people will other just go to try out stuff and buy from the selected places. I think the local retailers will remain as they are an efficient distribution network with entrepreneurs at each node. Even now, less than 10% of retail in US is on e-commerce

Source : Ycharts

As everyone has now realized that India is a market which plays much differently than US. Given the number of SMEs in India in the retail domain, which are mostly individual entrepreneurs — I think it would be very difficult to displace them.

Enabling the local retailers is the right way to go forward, we just need to figure out the best way to go about it!

Please share your comments if you have any views/counter-views :)