Paytm E-Commerce, which operates the online marketplace Paytm Mall, is set to make a deal with BigBasket, an Indian online grocer, according to Reuters.
The potential partnership will start in the first half of 2018, and follows the news that Alibaba, which reportedly holds a 62% stake in Paytm E-commerce, made a $146 million investment in BigBasket. The investment has long been rumored and is now official following a filing from BigBasket.
The deal will allow Paytm Mall and BigBasket to take advantage of each other’s strengths. BigBasket controls approximately 40% of India’s $750 million online grocery industry, according to Forrester research cited by Reuters. Meanwhile, Paytm’s digital wallet has 200 million users, making it a leading payments provider in India.
- BigBasket will sell on Paytm Mall. This will not only give BigBasket another avenue through which to sell its products, but it may also give Paytm Mall a big draw to its marketplace. Paytm Mall only launched a year ago, and is not yet a major player in Indian e-commerce. Working with a huge online grocer like BigBasket may bring more users to its platform, which can lead to sales beyond grocery.
- Paytm will be the default payments provider for BigBasket. The mobile wallet’s tremendous reach and continued growth could help BigBasket reach new customers, which, in turn, could help the grocer stay competitive as Amazon and Flipkart try to take it on in online grocery.
Paytm Mall has found recent success, and working with BigBasket could push it further. The relative newcomer to e-commerce reportedly captured 15-20% of e-commerce sales during the festive season (September 20 to mid-October) in 2017, with an estimated gross merchandise value (GMV) of $300 million. Paytm is likely looking to capitalize on this great performance, and adding BigBasket to its marketplace may be the way to do it, especially considering that 60% of Indian retail sales are grocery sales.
Alibaba is backing both companies, and is looking to use Paytm Mall to compete in Indian e-commerce. Paytm Mall is Alibaba’s play in Indian e-commerce, and with its investment in BigBasket and this upcoming partnership, the e-commerce titan appears ready to use its considerable funds to help it succeed. Whether Alibaba will make investments to create additional strategic partnerships for Paytm Mall remains to be seen, but if it wants Paytm Mall to thrive in such a coveted market, it will need to find ways to outperform Amazon, as well as Flipkart, which may receive backing from Walmart.
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