Paytm Mall has launched a wholesale entity Paytm Wholesale Commerce, which will be used to build inventory and to sell on the B2B model to select sellers on its Paytm Mall site, something the rivals are already doing.
According to an Economic Times report, the company has incorporated this new outfit with a share capital of Rs 20 crore and the stated objectives of this new entity include buying and selling, importing and exporting and reselling of goods. The provision in the objectives to import can pave the way for Alibaba to find a place for itself on the Paytm Mall platform as a seller, which it has been looking to do for a long time. Alibaba also runs an ecommerce site Ali Express and is able to service customers in India but the deliveries of the ordered goods cannot be managed quickly. Many sellers on the platform accept payments in only in dollars and not in Indian Rupees. Alibaba can leverage Paytm Mall to expand its presence in Indian through this new arrangement.
Experts say the primary objective in building a wholesale arm is to work up an inventory which is critical to the success of the ecommerce business. The other important reason in the Indian context is a cap imposed by the Indian government that no single seller on any ecommerce platform can sell more than 25% of the overall turnover on the platform. This puts the restriction on the sellers. The B2B model adopted by the ecommerce business owners allows them to buy in bulk from the manufacturers and then sell them to many entities at wholesale rates and then making them sell the goods to the retail customers on their B2C platform.
It must however be pointed out here that the ecommerce retail platform is bleeding the company dry with losses close to Rs 1800 crore on a turnover of less than Rs 800 crore.