Enter the dragon

Will Paytm Mall disrupt e-commerce in India?

Alibaba is introducing online to offline ( O2O) commerce in India.

TOI reports that Alibaba will allow Chinese vendors to sell on Paytm Mall.

What’s going on?

• First it allowed Indian sellers to sell to Chinese marketplace. Now Chinese sellers can sell through Paytm Mall.
• It is Alibaba’s lateral entry into Indian e-commerce ecosystem. Alibaba owns 46% of Paytm Mall, while Softbank owns 21% ( it also has a stake in Alibaba).

Why does it matter?

• Indian vendors may face a tough time. Most import items from China. Then they sell it through various marketplaces after adding their margins.
• Chinese vendors can directly sell to Indian consumers. It will remove the middle layer of Indian merchants.

What’s the bigger picture?

• Paytm Mall has been experimenting with O2O model ( online to offline) in India since 2017. It has organized Paytm 12.12 Festival .
• O2O model taps into the already existing customer behavior of show-rooming ( customers check out the product offline, and order online with discounts).

NDBJ Insight:

• Alibaba is eyeing the traditional market share with the model, not just looking to grab the online marketshare.
• India’s retail opportunity is many times of e-commerce market. That’s where Alibaba is looking at, similar to what it is trying to do in China.
• Dig deeper: PWC report on Indian retail’s future