Paytm Mall Cuts Cashbacks To Strengthen Its O2O Biz Model

A week after Paytm Mall rejigged its top-level management, the One97 Communications-owned ecommerce company has slashed cashbacks by more than 80% across its online marketplace categories such as grocery, electronics and fashion.

“We have cut cashbacks across categories. This is part of the plan to… build stronger O2O (or online-to-offline) play, where we are investing big this year,” ET reported citing Paytm Mall founder Vijay Shekhar Sharma.

He added, “Grocery O2O model has become net positive in select markets, prompting the company to remove cashbacks from warehouse-led sellers where double costs apply,” the Sharma reportedly said.

The company has been working with more than 100 fast-moving consumer goods (FMCG) brands — such as Marico, Hindustan Unilever, Parle Products — to drive sales through its O2O model. The company had been campaigning to take these products to the masses and had reportedly invested over $25 Mn in the first quarter of 2018 to maximise outreach of these joint campaigns.

The company had then said that its Quick Response (QR) Code has been playing a pivotal role in driving consumers engagement and promoting product sales.

Last year, the company had partnered with several brands during its October 9-15 sales, ‘Mera Cash Back Sale,’ with an investment of over $33.7 Mn (INR 250 Cr).

According to Sharma, the company is also removing cashbacks from warehouse supplied items and directing them toward physical store supplies, aimed at saving logistics costs.

“The focus is on local offline sellers and leverage local deliveries,” he said.

Paytm set up its wholesale entity for its ecommerce business in September last year and expects it to contribute about 10-15% of the total Paytm Mall’s GMV (gross merchandise value) in the coming year.

“Most brands we see in India are well distributed across thousands of cities and towns while warehouse inventory for online merchants is concentrated in top 20 to 30 cities only,” Sharma said.

Meanwhile, Paytm Mall in a bid to strengthen its daily operations, marketing and verticals, appointed Paytm Payments Bank chief financial officer (CFO) Sudhanshu Jain to lead the ecommerce business as the financial comptroller, Alibaba Group senior director Bharti Balakrishnan and Paytm vice-president Varun Gupta to lead its shopping categories. It also appointed Srinivas Mothey to lead the marketplace’s marketing as a chief marketing officer.

The restructuring was made after the company’s share of the ecommerce market declined from 5.6% in 2017 to 3% in 2018, according to reports.

[The development was reported by ET.]