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Paytm to spend big on logistics, warehouses; here’s what it plans to do

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Updated: April 8, 2016 6:39:50 PM

Paytm, the online e-commerce and m-commerce platform, which currently reaches to around 39,000 pincodes across the country adding more sellers in the tier II , tier III cities and beyond

paytm payment banksPaytm, the online e-commerce and m-commerce platform, which currently reaches to around 39,000 pincodes across the country adding more sellers in the tier II , tier III cities and beyond (Reuters)

Paytm, the online e-commerce and m-commerce platform, which currently reaches to around 39,000 pincodes across the country adding more sellers in the tier II , tier III cities and beyond. The company plans to more than double its investment in the warehouse or fulfilment centres, allocating about Rs 500 crore in the coming fiscal to strengthen its logistic network across the country. Sudhanshu Gupta, vice- president (logistics) at Paytm and an ex-Flipkart employee, talks to Prabhu Mallikarjunan about the company’s plans. Excerpts:

What enhancement are you bringing in to reduce the delivery time?

We are aggressively working on O2O (online-to-offline) model. We are currently using geo-tagging which helps us to identify sellers closest to the buyers’ location. We are also partnering with more and more hyper-local delivery partners like roadrunner, fasttrack and others for smoother and same-day delivery of big and large local shipments.

We currently have around 15 delivery partners and would be adding more in the coming days. We don’t decide on which seller is going to deliver the product. That is the decision of the sellers in a marketplace.

Do you have plans to open your own warehouses?

We are a completely no inventory model. We will work aggressively with partners (third party players). Today we have 13 third party fulfilment centres, essentially owned and run by third party players. We invite sellers to keep the stock in those units and integrated with us. when you have a own warehouse, there will be a Capex and there are limitations. Whereas, when you strategically work with partners with profit-technology integration, we are able to scale up faster and the costs are borne by the customers or sellers. Ideally, we don’t bleed in logistics.

Logistics has always been a high cost area for e-commerce and start-ups. How are you reducing cost in this segment?

The holy grail of reducing cost in e-commerce is to ensure that a shipment does not have to travel a lot of distance. This is where all our initiatives to promote local commerce comes in. For sellers who have warehouses across India, we have developed algorithms which select product origin which will lead to lowest delivery cost. We now also have 16 fulfillment centers in top tier 1, and tier 2 cities, so that the shipment is always being shipped from the closest possible location to the customer.

How has the investment in Loginext data analytics start-up added value to the company.

Loginext investment is more in the spirit of promoting more and more regional logistics players to come in the e-commerce platform. They help the seller in adopting a plug and play solution like Loginext to increasing the pick-up and delivery reach. We will continue to expand that network.

How do you manage resources during the peak season?

We have fully partner driven logistics model. Hence, we get the benefit of not having to manage delivery staff capacity. Having said that, we regularly endeavor to help our partners in better capacity.

What it the turnaround time (TAT) for delivery and how have it improved over the years?

The average TAT has reduced over the years from 7-10 days to 2-5 days from order placement to delivery. This is significant improvement for market place model of business which does not have inventory control. We have launched 16 partner owned fulfillment centers where merchants can keep their inventory, and orders can be processed faster. Additionally, we also keep running seller incentive programs from time to time to promote faster shipping.

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