Nearly two years after eBay sold its India operations to Flipkart, it has made it's third foray into India's red-hot ecommerce space by betting on Vijay Shekhar Sharma's Paytm Mall. The San Jose, California-based company, the world's second-largest etailer, has picked up a 5.5 per cent stake in Paytm Mall for an undisclosed amount but sources told The Economic Times that the financing round amounted to about $150 million.
While eBay first came to India in 2004 with the acquisition of Bazee.com, at a time the domestic ecommerce industry was worth just $20 million, it struggled to make an impression. The entry of Flipkart and Amazon only made matters worse for it. After exiting Snapdeal and Flipkart - making a $61 million loss on the former and a $167 million gain on Walmart-backed Flipkart - it is now looking to re-enter India. The etailer has taken a board observer seat in Paytm Mall but will continue to operate its ecommerce portal in India.
"This investment is a clear testament of our turnaround, and the shopkeeper commerce model being validated by a new set of investors," Paytm's founder Sharma told the daily. This development comes on the heels of significant restructuring of Paytm Mall's business, moving from a discounting- and cashback-led strategy to an online-to-offline (O2O) model.
To justify this strategy shift, Sharma previously said that while most brands in the country were well-distributed across thousands of cities and towns, warehouse inventory for online merchants is concentrated in top 20 to 30 cities. The move has certainly paid off. In April, Paytm Mall had announced a growth rate of over 200 per cent growth for its O2O business over the past six months.
According to eBay, as part of the deal, its global inventory - which according to Sharma boasts over a million unique international products - will be available to over 130 million active users on Paytm Mall and Paytm's app ecosystem. The catalogue integration is estimated to be complete in the next couple of months and is expected to boost cross-border trade. Sharma, in fact, predicts that cross-border business will account for about 10-15 per cent of Paytm Mall's overall sales in the next one year.
As per regulatory filings, Paytm Mall last raised Rs 1,510 crore in June last year in a round led by SoftBank and Alibaba, at a valuation of about Rs 12,696 crore. "With this [eBay] investment, and our current burn structure of less than Rs 40 crore a month, we have capital for over four years," Sharma added. Paytm Mall reportedly ended the last financial year at Rs 13,000 crore and is now targeting Rs 17,000 crore in gross merchandise value.
(Edited by Sushmita Choudhury Agarwal)