Brace for more festive e-discounts as Paytm Mall to splurge Rs 1,000 crore

BENGALURU: This festive season, consumers can look forward to steeper discounts beyond the top two e-commerce players - Amazon and Flipkart. The Alibaba-backed Paytm's commerce business Paytm Mall is putting aside Rs 1,000 crore for marketing, cashbacks and promotional spends as it gears up for its first festive season sale where it has to fight bigger rivals. A large chunk of this capital would be used in doling out discounts during the sales season in order to get consumers to its platform.

Both Amazon and Flipkart have already increased their monthly spends in the run-up to the festive season sale, as we reported last month.

For Paytm Mall, sales over the next 60 days would also indicate how its strategy to opt for online-to-offline (O2O) channel is faring. These sales events around Diwali are much publicised by e-tailers as they aim to clock a significant part of their overall annual sales during this period.

Paytm Mall COO Amit Sinha said, "Our business model is to build digital infrastructure and partner with offline retailers to make them the winner. In the long term, we - along with millions of stores - will be fighting one or two online retail stores. Our winning formula remains the power of collaboration and scale across every corner of India."

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Among the categories that will lead the sales for the company are fashion, gifts, electronics, appliances, consumer durables and home furnishing. The commerce arm of Paytm has raised $200 million, led by e-commerce major Alibaba, and aims to hit a run rate of $4-billion gross sales on an annualised basis. Gross sales, or GMV, is the overall sales on an online marketplace, excluding discounts and returns, out of which e-tailers take a share of 5-15% as their margin.

The company has on-boarded 1,000 brands and about 15,000 brand-authorised retailers on its platform. In total, the platform has about 30,000 sellers. Paytm Mall is also seen as Alibaba's platform for its India e-commerce play after the Jack Ma-led behemoth decided to back the Noida-based company's commerce business.