Paytm is one of the fastest growing Indian e-commerce shopping website.

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Case study on Paytm
Pay-Through-Mobile Revolution in India
Paytmis one of the fastest growing Indiane-commerceshoppingwebsite. Butthis is not the
Paytmwas exactly when it was foundedin2010.Paytm was founded as prepaid mobile recharge
website. But now the business has diversify themselves to many other sectors like utility bill
payment, wallet payment, wallet to wallet and wallet to bank transfers for many leading internet
based companies in India, shopping, discount coupons etc.
CompanyProfile
Noida-basedmobilecommerce platform wasincubated by One97 Communications. The idea was
actually implemented by VijayShekhar Sharma. The app downloadedon variousplatformshas
touchedthe mark of 7 million.Theyhave over20 millionregisteredusers and26 milliontransacting
users whopayonline. The additionalfeaturesaddedlike Bargainpowerwhichisnotcurrentlyavailable
at any othermarketplace andunifieddashboardhasmade the sellingandbuyingmore interesting for
users.Theydo 400,000 ordersper day,whichissecondhighestinthe countryafterIRCTC. At present,
the companyis doing$1 billionGrossMerchandise Value (GMV) withonly15% customerschoosingCash
on Delivery(COD) option. Paytmisalsoavailable acrossmanypopularmobileapps(likeUber,
Bookmyshow, Homeshop18MakeMyTrip,Naaptol andFoodPanda) aspreferredpaymentmethod.
Different Business
DiversificationfromPrepaid Mobile Recharge Businessto E-Commerce
EveryIndianlovestobargain,andno Indiancan resistwhentheygettheirtrustedmobilerecharge app
as a platformto letthembuythingsonbargain.Yes, Paytmoffersbargainstoshopperspurchasing

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clothing,shoes,accessoriesandothergoods. InFebruary2014, they launchedits mobile based
marketplace and now recentlyhaslaunchedasellerdedicatedappwith zerocommissionmodel.
Theirwebsite andmobileapphasbeentransformedintoa full-fledgede-commercemarketplace
offeringcategoriesfromelectronics,mobilephones,sports&health,home &kitchen,books,baby&
toysand many more categories. Theirvisionforsettingupthe ecommerce businessistoremove the
middlemenandallowSMEs(Small &MediumEnterprises) tosell theirproduce directlytoconsumers
throughthe online platform. These SMEevenincludesboutique producersandsmall manufacturer.
Theyhave about 40 millionregisteredSMEsinIndia. Theyare tryingto anchortheirplatform onkey
utilitymonthlyneeds of the consumerlikeenergy,transport&communication. 15,000 merchantsare
activelyregisteredwithPaytm.
BusinessModel for theirE-commerce
Accordingto the founderof Paytm,VijayShekarSharma, theyare differentthananyothermarketplace
out inthe market.Theyprovide 3 extratoolsforthe IndianMerchantsto helpthemtogrow. The 3 tools
are talkingto the merchants, catalogue management- givingthose insightsaboutconsumers,analytics

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All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.
and feedback ontheirstorefrontandlastly marketing- where merchantscanbecome partof Paytm
promotions. ApartfromitPaytmdoesn’tprovidesthe logisticsservice totheirmerchants.But theysolve
the merchant’s problemof by givingthemcustomersintheirvicinity.Andevenif theyare sellinginthe
remote areas, theyalreadyhave theirlogisticscloudwithdataof multiple logisticscompaniesinit.
Zero CommissionMobile AppMarketplace for SME’s
RecentlyinApril hasnowcome up withthe SellerAppwithazerocommissionmodel. Whatthismeans
is that sellerson the platformdon’t need to give a commissiontoPaytm onsales. Merchantskeep all
of what they sell.Othermarketplaceslike FlipkartandSnapdeal workona commissionbasedmodel.
Paytmthismove islike whatAlibabaGroup’sTaobaoworkson.Taobao is an online marketplace in
Chinaoperatedbythe AlibabaGroupthat startedworkingonzerocommission concepts.
Walletapp
Paytmhas alsolauncheda walletappwhichallowsuserstotransfermoney betweenthem. Thiswallet
essentiallyletsyoustore cashdigitally,whichcanthenbe usedformobile andonline transactions.The
companyfurtherrevealedthatitnowhadmore than12 millionusersmakinguse of the PaytmWallet
service.
Railway Ticket Booking Business
Paytmhas alsocontractedwithIRCTC to make Paytmwalletasone of the online paymentoptionwhile
bookinga ticket.IRCTCprocessesaround180 milliontransactionseveryyear;andPaytmhasa strong
base of 60 millionwalletuserswhocan use theirwalletinsteadof usingplasticcarddetails.These wallet
holdershave anaccess to shopoverthe app and paywithPaytmwalletacross21,000 merchants.
Bus Ticket Booking Business
AftergettingfundingsfromBusinessTycon- Ratan Tata andEcommerce giant- Alibaba, Paytmstarted
theirbusticketbookingbusinesstoo. Theyare booking20, 000 bus tickets a daynow.Andtheirbooking
partnersfoundthat theyare movingofflinebusinesstoonline,noteatinguptheirmarket.
‘Immediate PaymentService’- FundsTransfer Business
In March 2015, Paytm announcedtheirnew featurethatenablesuserstotransferfundsintoanybank
account. The system,calledthe Immediate PaymentService,enablesuserstotransferamaximumof
5,000 Indiarupees($US80) per day andup to 25,000 rupeespermonth.Paytmwill allow aminimum
transactionat 1,000 rupees,butthe senderneedstohave atleast2,000 rupeesincreditassociatedwith
theiraccount. Paytmusersmusthave theirmobile numberoremail verifiedand theyshould be
registeredonthe systemforover45 days inorder to use the service,accordingtothe company.
GroceryDeliveryin Bangalore
Paytmhas recentlyjoinedinthe hyper-local venture bystartinggrocerydeliveryinBangalore.The hyper
local markethas raisedmore than$60 millionoverthe pasttwomonthsfromvariousventure
capitalists.
FundingFrom Alibaba
In feb2015, Alibaba– the biggest&most valuable ecommerce companybought 25%stake inPaytm with

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the visionof enteringintothe IndianMarket. The mobile recharge &Ecommerce Companygotabout
$575 millionfrom ALibaba.The deal withAlibabahas helpedPaytmtobuildthe paymentsecosystemin
India.Itusesthe fundstogrow itsmobile paymentsbusinessanditscommerce userbase.Fundswere
alsousedfor improvingtechnologyformobile operations,aplatformforaggregatingcouriercompanies
to ensure deliveriescountrywide,customeracquisitionandmarketingactivities.
Fundingfrom India’s leadingInvestor- Ratan Tata
In the same month,India’sleadinginvestorandbusinessmanRatanTata hasalso investedinthe
company.Paytmwill utilize the fundinrecruitingfreshtalent,acquisitions,marketingandbrand
building.
How they Make Money?
There are three businessmodelsforgeneratingrevenues –
1. Commissionsfromtelcos/DTH providers for eachrecharge done on the site,
2. A small fee from customers whentheyoptfor coupons and
3. Feesfrom merchants whocome on board.
The merchant model varies,though.While somepayforlistingtheircoupons,otherspayfordistributing
those andso on. Interestingly,merchantsaccountforthe largestshare of the company’srevenues (50
percent),followedbycustomerfee forcoupons(30per cent) while recharge commissionscome last(20
percent).Thisis understandableasthe marginsinthe recharge businesshappentobe low.Infact,it lies
inthe range of 0.5-1 per cent.
International Expansion
In Dec 2014, the mobile commerce platformhashasannounceditsplanstoforayintointernational
marketsof Singapore & otherSouth-eastAsianStates. The companysaysthattheychoose SouthEast

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All contents © 2016 Effectus Solutions Pvt Ltd (CrossProf.com). All rights reserved.
Asianmarketslike Indonesia,ThailandandMalaysia,astheysee greatopportunityforpaymentson-the-
go viathe PaytmMobile Appinthisregion. Paytmintendstobring,tothese markets,theirappdriven
convenienceof payingforutilitybillsinthe firstphase,andwill caterprimarilytoareassuchas bill
payments,transportation,parking,metrosetc.The companyaimstoreach upto two millioncustomers
inthe firstyearof operations.
Paytmhasyetto turn in a profitbutSharma saysheis not chasing profitability yet.Erik Jing of Alipay,
the Alibaba Group Company said,“We don’tcareaboutprofitability,wecare aboutSMEs,userson the
Paytmwallet.” Alipay waskeen on expanding financialinclusion in India through Paytm.
Theirtargetthis yearisto bring1,00,000 merchantsontheir platform. Overthe nextsix months,the
firmisalso consideringat25,000+ ticketsperdayusingPaytmwalletonIRCTCplatform. Accordingtoa
report,“Paytmclaimsto earnrevenuesof over$500 millionnow butSharmasaysthiswill jumpto$2
billionbyDecember2015. Half of Paytm’srun rate will thencome fromthe m-commerce marketplace
push.

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Ref:
http://dsim.in/blog/case-study-paytm-journey-from-mobile-recharge-to-e-commerce-market/
http://www.mobilepaymentstoday.com/news/paytm-expands-mobile-wallet-capabilities-in-
india/
http://www.bgr.in/news/paytm-wants-to-go-global-looks-to-enter-singapore-and-south-east-
asian-markets/
http://www.medianama.com/2015/03/223-most-of-the-marketplaces-in-this-country-have-a-
dormant-merchant-base-vijay-shekhar-sharma/
http://articles.economictimes.indiatimes.com/2015-02-06/news/58878976_1_paytm-alibaba-25-
stake
http://yourstory.com/2015/03/paytm-funding-ratan-tata/
http://indianbizparty.com/news/paytm-announces-zero-commission-mobile-app-marketplace-
for-smes