Digital Commerce in India

by Raymond Pucci 0

Paytm has become India’s largest mobile e-commerce platform, from its start as a basic mobile card re-charge and utility bill payment system. Owned by One97 Communications, India’s largest mobile internet company, Paytm has successfully grown into a digital transactions and e-commerce company through continued expansion, as described by Entrepreneur India.

It seems Digital Wallet is the next big thing in the Indian e-commerce industry. And Paytm is revolutionised the concept by bringing it to the masses. What Flipkart did to e-commerce industry, Paytm is doing for digital wallets. It becomes even more significant considering that Paytm is a digital wallet with an e-commerce platform.

Last year was a good year for Paytm. The combined efforts of the whole team – from marketing to technical- proved fruitful when they reached 3.5 million transactions per month, solely offline. The best part about this figure is that 70% of these transactions come from Tier II and Tier III cities. Just these offline transactions are worth $8.5 million, excluding mobile recharges. It estimates that transactions in the offline business will alone grow 10 times to 35 million by the year end.

They say numbers don’t lie and for Paytm this truth is nothing but music to ears. Paytm definitely has an edge over all other digital wallets and they are firmly holding on to their 1.4 million users. So what is it that Paytm is doing right? Let’s have a look at what strategies they have been using.

According to the consultancy firm PwC, the e-commerce sector in India is expected to grow by 34% to $22 billion in 2015 compared with last year.

Paytm now competes with powerhouse e-commerce players such as Amazon, Snapdeal, and Flipkart. Although India’s Internet access is not widely available and smartphone use is relatively low, Paytm has exceptional upside potential. Alibaba and its payment arm, Ant Financial, own about 40% of Paytm, making the Indian company a formidable player in the country’s digital commerce marketplace.

Overview by Raymond Pucci, Assoicate Director, Research Services at Mercator Advisory Group

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