It was a hot Thursday afternoon, and the Delhi heat would melt your skin.
Paytm had arranged a session in a posh bar and lounge in Connaught Place, and my lunch was set. This was an opportunity for journalists to hob-nob with top company officials.
As evening fell, Vijay arrived, shirt not tucked in, looking positively tired, and hungry. “Get me something to eat! I’m hungry as hell!” In comes some fried rice and chicken.
Over the next hour he tackled the most hostile questions from journalists, punctuating his answers with jokes and jibes like ‘mere flights aur hotels ayenge!’ (Flights and hotels will soon be available) and ‘I won’t cheat customers. I’m Vijay Shekhar, not Vijay Mallya.’
By the end of the session, I was sure of two things – there’s nobody as sharp as a semi-drunk journalist, and that I had a story. It pays to be the only sober guy around when everybody else is ‘delightfully high’.
Who’s paying the damn
Retailers offer discounts because they buy in bulk. We’re not into that business. It’s an asset-light business model. If a merchant offers a discount that doesn’t add any value, that’s when we bear the cost.
Other players (Flipkart, Snapdeal, Amazon) are retailers that have to pay out of their own balance sheets.
Tax Obligations for Cashback
Once you have more than Rs. 50k in a Wallet, IT laws apply.
Why will you win, and others lose?
While most platforms were burning cash to grow GMV, like Shahrukh said in DDLJ, we took the longer route. We brought sellers, and asked them to pay for the marketing rather than us paying for it.
We didn’t spend more than a couple of hundred million dollars building the marketplace. The money we’re making is the best ROI in the e-commerce industry.
Also, we want sellers to win, while other platforms find out what’s selling most, and start selling that. In the long term, every platform but Paytm will make sellers lose.
Google what e-commerce companies across the world do with highest selling inventory and you’ll find out for yourself.
Have you broken even?
As a YoY basis, till last year we were profitable. This year we’re not because we’ve spent heavily. Last to last year we generated hundreds of crores in profits.
Over the month, we’ve had 200,000 orders a day on the marketplace, with no net cost to Paytm. That means the entire cost is to the retailer, and Paytm is making money off every purchase.
How on earth can you give cashback on everything, and yet be profitable?
We have a marketing fee for retailers. That’s anything from 4-15%.
It’s our choice if we burn it, or give it back to the customer as cashback. There is always a space for us to step in if merchant’s not discounting, but that’s rare.
Clothing sells at 45-50% margin. The merchant, even after 15% cashback, can have a margin as high as 35%, and if they sell in bulk, they get an additional 5-10% as cashback.
As per unit economics, there is always money available as cashback. Also, we don’t offer free shipping.
Will you ever buy your own warehouses if you’re not buying your own inventory?
We have third party logistics partners like Blue Dart, FedEx, and others. Today we have 13 warehouses across the country for Paytm merchants. They can stock their inventory in any of these warehouses, and it’ll live sync with our platform.
We’ll never buy warehouses, we’ll always have partners.
Some of the products don’t have warranty information!
We’ve started working on brand authorization.
A seller can only sell, say electronics if there is green signal from the brand. There is an authorized brand seller badge. You can’t list a product if you’re not selling authentic products.
Fraud Buyers
You’ve heard many of horror cases already. We’ve handed many to the police.
We do a sanity check now. Also, to let you in on a secret, we’ve introduced a buyer rating. That will determine whether you’ll be able to shop on our platform or not. I learnt this from Travis (CEO, Uber).
If you topup Rs. 10k in your Wallet, and get Rs. 2.5k in cashback, you’ve to give KYC to get that cashback immediately. Otherwise there’s a month-long waiting period.
We’ve solved that too.
The Government of India has introduced the Wallet as a means for financial inclusion. People with up to Rs. 10k in their wallet can just verify e-mail, phone number and offer minimal KYC. Beyond Rs. 10k in the wallet means you’ll have to do full KYC. That’s a tedious procedure.
In that case we’ll send that cashback directly to your bank acc via NEFT.
That affects our margins, but customer satisfaction is also something.
Why is cashback paid after shipment and not before shipment?
They are people who try to cheat the system.
They place the order, cancel it before shipment, and spend the cashback before you can take any action.
Why no Airtel offers on
Airtel has decided its offers won’t be available anywhere other than their official website.
Basically, they think others will hijack their business.
Why is Paytm not in Hindi, or other Indic languages?
The Indian shopper isn’t sure what he should search for.
‘iPhone’ might become ‘AiPhone’ in Hindi, and that messes with Google’s global search algorithm.
Any chance of Patanjali on Paytm?
On a serious note, yes.
Image Credit: Indiatimes