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PayTM To Get $100 Mn Chinese Sellers On Board With Alibaba's Help

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PayTM, the payment gateway, which also has forayed in to market place commerce, harbours strategic plans of connecting 100 million Chinese merchants to Indians in five years. These merchants are part of the internet giant, the $12 billion Alibaba's, commerce platform.
 
Alibaba had earlier invested $575 million in PayTM's parent company One97Communications to foray into the Indian payments space. Sources from PayTM told BW|Businessworld that while 85 per cent of their revenues, growing at a run rate of $1.5 billion and year-on-year growth of 25 per cent, were from the mobile recharge business it was "extremely" important to create a large ecommerce platform to increase cashless transactions in the country. The source added that Alibaba's knowledge and skills, in global online market place commerce and transactions, could help PayTM ease cross border purchases for consumers.
 
The significance of this strategy is phenomenal, barring the legal hassles of bringing goods in from China, because it will take on Snapdeal and Flipkart head on. These companies are burning cash in acquiring customers and adding more merchants to the platform. Flipkart and Snapdeal already have 100,000 merchants each on their platform and are adding more small businesses to serve their customers. No wonder big monies have been raised here.

Flipkart has raised more than $2 billion and Snapdeal as raised close to $1billion. With PayTM accessing a global market place, it throws a very different perspective to the ecommerce game and makes ask a few questions? What kind of items will be on boarded to the platform? Are Indian small and medium businesses going to up their ante partnering with Amazon, Snapdeal and a Flipkart? Also, can PayTM ramp up this model quickly by reducing legal hassles and creating a seamless strategy that involves a minimal loss for maintain returns inventory or reverse logistics? Probably the strategy will be to flesh out the implications of cross border transactions from a country which India has a love and hate relationship. But we all love Indo-Chinese food.
 
The total payments market in India is only $2.5 billion and the opportunity is 12 fold. For PayTM the game would be to capture a significant portion of this market. Today the acquisition of Indian customers is becoming a hunt. Global investors want each startup to acquire 300,000 customers every quarter. The burn rates are going to be high and the valuations are going to be overwhelming. Consolidation is possibly an option in three years because the company with the most money will survive by eating away the rest. Recently Freecharge was acquired by Snapdeal for an all stock deal for $400 million. For the moment valuation is everything and customers are in the middle of the game.


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