Paytm, leveraging its largest stakeholder Alibaba’s platform, has stepped into cross-border commerce. It will now help sellers on its platform source more than 5 Mn products from China at a much cheaper rate.
As part of the programme, it has already identified 300 Chinese suppliers for electronics and lifestyle products. In India, the company has chosen 100 Indian merchants to connect with these suppliers. Of these, 25 are already being trained by Paytm team.
By March next year, it aims to bring 10,000 such sellers on its platform. Initially, it will begin with fashion accessories and will later add categories such as mobile accessories and home decor.
“We expect the Indian SME’s cost to come down three times with our direct connect,” said Bhushan Patil, President at Paytm. “Most SMEs don’t import directly, they import from local distributors, and there may be 2-3 steps shuffling, we connect directly. We also offer bonded warehousing facilities, leveraging our tie-ups with import houses and trusted payments with our partnership with Citibank, which further reduces costs at scale.”
At present, there is no website and all communication are being done via emails, with logistics and payments support. It will take around 7-25 business days to deliver products to Indian merchants.
Once sourced, the products can be stored in company’s bonded warehouses until they need to be sold. “That way the seller pays duties, which are close to 30%, at the time of sale and not in bulk,” said Patil. “Once we scale up, it will allow us to use a lot of Alibaba’s services and tools,” Patil added.
In September 2015, Alibaba invested $680 Mn in Paytm, grabbing the majority stake in the company. Also, in March, it was speculated that Paytm could spin-off its marketplace business to allow Alibaba to expand in India. The deal would further involve $300-400 Mn investment in Paytm.
As of now, Paytm’s marketplace has around 1,25,000 merchants and the monthly orders on the ecommerce portal are expected to grow to about 5 Mn orders by March 2017.