Mobile wallet cum e-retailer Paytm is planning to spend about R2,500 crore over the next 18 months on customer acquisition, technology, human resources and logistics.
The proposed expenditure is aimed at adding 500 million users by 2020. Providing the break-up of the investment, Vijay Shekhar Sharma, founder of Paytm told FE around 60% of the overall investment of Rs 1,500 crore will be used for customer acquisition and activation by promos, discount and offers.
“About Rs 600 crore will be invested in technology and people and about Rs 400 crore in catalogues and logistics,” Sharma said. Paytm, the consumer brand of mobile internet company One97 Communications, is changing its business model; from being primarily a wallet player with a strong mobile recharge business it is now also an e-retailer. Earlier this year, Ant Financial, the financial arm of China’s e-commerce giant Alibaba invested $575 million in Paytm for a 25% stake in the company. The company’s other investors include SAIF Partners, Sapphire Venture and Silicon Valley Bank.
The firm claims it has crossed the 100 million user mark and is aiming for 500 million users by 2020. By then the company hopes to achieve a gross merchandise value of Rs 1 lakh crore. This apart, the company will also invest about Rs100 crore in two software solutions firm in deals that are likely to be finalised over the next two months.
Though Sharma declined to name the two companies, he however said that the investment is towards extending the merchant ecosystem. “These are the companies which will be building software useful for our merchants and are part of the cloud platform we want to create. We believe in the power of mobile and with cloud, the combination is lethal,” Sharma said.
Having advertised during IPL matches and explored co-branding efforts with a few FMCG brands, Paytm has been able to add 50 million users over the last three months, it claims. The company has won the title sponsorship for all cricket matches, domestic and international, to be played in India.
“Today one-third of our customer base is from tier-3 and tier-4 cities. The future market for us will be in the vernacular language market. The next set of 100 million comprises people who have typically been outside the financial services ambit. They will need utilities and proven user cases, which is why we are keeping our targets moderate,” Sharma added.