With an investment corpus of Rs 20,000 crore spread over five years, Paytm founder and CEO Vijay Shekhar Sharma in an interview with Anushree Bhattacharyya talks about the company’s plan to increase efficiency by snipping losses and creating a cost-effective e-commerce business. Excerpts:
With Paytm wallet and the payments bank business being contribution positive, are you earning now on every transaction?
The Paytm wallet business and the payments bank business have been contribution positive for the last six months. We are not selling $1 for 99 cents; we are making $1 for every transaction worth $1.99. Going forward, we definitely want to bring it net of some other cost, if not EBITDA. This we intend to do by starting new streams of revenue, by increasing productivity of our staff, etc. Then we would like to break even. As for the e-commerce business, which we operate under Paytm Mall, that won’t be profitable in the next five years.
How do you intend to catch up in the e-commerce business where you are far behind Amazon and Flipkart?
As far as e-commerce business is concerned, I think we are very much in the race with Amazon and Flipkart. Within six months, we have reached half of their size in terms of turnover. For example, at the time of festive season in October, we clocked orders worth $350 million in GMV, while the other two players posted GMV of about $500 million each. We are working towards building a cost-effective e-commerce platform. We don’t want to sell smartphones for 90 cents or $1 and call ourselves a high GMV earning e-commerce platform.
So where does the business opportunity reside for you?
The business opportunity resides in tier 2, 3 and 4 cities and smaller towns, which is being currently served by brick- and-mortar shopkeepers. The aim is to bring those shopkeepers online and make their customer base transact online. Our power will not be in efficient supply chain or launching private label, but if a customer orders today, she should be able to either pick the product from the nearest shop or that shop should be able to deliver it to her. In fact, more than 20% our orders are delivered within the same or next day. We believe that by next year, we would be able to deliver 50% of our order either on the same day or the very next day.
Currently, Paytm wallet does not charge customers for any transactions. Do you plan to start charging anytime in the future?
The customer will never be charged. Merchants will be offered value-adds based on where money can be made. Technology companies have an interesting business model —they move the money making business to zero revenue earning, and then move the needle to something else. For example, Amazon is not bothered about the margin it earns from sellers on its platform. Rather, it makes money by charging for other services.