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A nimble startup is targeting a blind spot of India’s ecommerce giants, and pulling the rug from under their feet

A nimble startup is targeting a blind spot of India’s ecommerce giants, and pulling the rug from under their feet | Internet Presence | Scoop.it
While the big cats of ecommerce fight it out for leadership stakes in India, a jackal may run off with the spoils - mobile commerce innovator Paytm.
Back in July, a billion-dollar funding round for Indian ecommerce leader Flipkart made a waves around the world. The very next day, Amazon founder Jeff Bezos declared from Seattle that he would pump US$2 billion into his company’s business in India. True to his word, the attention-grabbing Bezos rode a truck in Bangalore last Sunday, flashing a US$2 billion cheque which he handed over to the head of Amazon India. But while the big cats of ecommerce fight it out for leadership stakes in India, a mobile commerce jackal may be running away with the spoils. Here’s one indicator: When Tech in Asia spoke to Flipkart in June, it was doing 100,000 transactions a day on mobile and desktop. That sounded impressive, until we discovered mobile commerce portal Paytm is processing three times as many orders a day. It’s targeting one million orders a day by 2016, and if it reaches that goal, it will be the first in India to do so. Vijay Shekhar Sharma, founder of Paytm, points to his favorite Chinese saying when asked about how Paytm has flown below the radar. “Peach and plum trees don’t speak, but still people find them. We at Paytm are like that,” he tells Tech in Asia. “Our numbers, in less than two years, take people by surprise. We like that.” paytm app 2 Another significant number is five million – that’s how many orders a month Paytm gets via its smartphone app, which launched just this year. Those five million mobile transactions account for more than half of its total transactions, showing how the massive shift towards mobile commerce in India plays right into the hands of a mobile-focused player like Paytm. Better than behemoths Huge numbers of new users are wading on to the internet along with the tidal wave of budget smartphones hitting India. For this majority, who will only access the internet on mobile devices, user behavior is very different from that of the earlier generations which browsed ecommerce sites on the web. A bottom-up product like Paytm claims to serve these new users far better than behemoths like Flipkart or Amazon, which must adapt their existing models to fit needs of the mobile shopper. Vijay Shekhar Sharma gives an example of how Paytm is savvier about this new type of online shopper: On our Paytm app, there’s no ‘add to cart’ button. We omitted it because we wanted to use that space for better things. The problem with internet commerce is that it’s a funnel so big that you end up clicking five to seven times after you want to check out. On mobile, this is lethal. The two-click checkout we do on Paytm is one of the reasons why our consumers give orders in the volume we get. Vijay Shekhar Sharma founder of Paytm Vijay Shekhar Sharma, founder of Paytm Solving payment pain points The biggest hitch for mobile shopping in India is payment. There are hundreds of millions of debit and credit cards issued in the country, but only about five million credit cards are actively transacting online. Fear of fraud stops many Indians from giving out their credit card details. Cash-on-delivery is a popular option, but many small merchants cannot cope with inventories and logistics, or the inefficiencies of such a system. Paytm zeroed in early on this pain point by applying to the Reserve Bank of India (RBI) for a PPI (prepaid payment instruments) license. Consumers can keep money in escrow accounts maintained by Paytm with banks, and it is only released after the goods are delivered and verified. The stringent regulations in India for online transactions have prevented many, including Flipkart, from getting a PPI license. “It took one and a half years to get the PPI license from RBI,” says Paytm’s founder. “It was very tough. Each one of our users now has an escrow account with a nationalized bank, and every month we have an audit with the RBI on the balance we have in these accounts.” paytm app 1 Nevertheless, it’s the PPI which allows Paytm to do two-click checkouts, because payment details don’t have to be entered every time. This is the unique selling point of Paytm. “India’s largest issuer of credit cards has issued less than eight million cards; we already have 8.5 million Paytm card users,” points out Sharma proudly. Cracking the problem of mobile payments is also opening up new opportunities for Paytm. For example, a number of foreign companies getting into the mobile space in India – such as Airbnb and Uber – are running foul of RBI rules on routing money out of the country or two-step verification for credit card payments. A tie-up with Paytm could remove such hurdles. “We are going to launch a payment platform for other merchants called Pay with Paytm. We will solve the problem of abandoned carts in a mobile gateway in a creative way. Wait and see,” Sharma tells Tech in Asia. Going by what Paytm has done in a short span, that may not be an idle boast. According to Sharma, 90 percent of the shoppers on Paytm are repeat customers, which, if true, marks an industry high. He says they keep coming back because it’s a mobile-friendly place. A cool new feature, for example, is a messenger in the Paytm app which lets buyers and sellers haggle – this takes a local, age-old practice and places it on the most modern computing devices. More than half the orders are now made after haggling. “We Indians are so used to bargaining. Even when we buy a Mercedes or a BMW, we will ask, am I getting a discount on this?” chuckles Sharma.


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Marc Kneepkens's insight:

"A two-step process is better than clicking 5-7 times! That's the reason for our success."

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Unlocking India’s innovation potential - The Times of India

Unlocking India’s innovation potential - The Times of India | Internet Presence | Scoop.it
Today we are at the edge of innovation in several fields including big data, clean energy, mobile and social computing.

Today we are at the edge of innovation in several fields including big data, clean energy, mobile and social computing. Yet, translating this into big rewards on the global stage continues to be a challenge for India. What are the opportunities and how do we leverage them as a nation?

The second most populous nation, the third highest GDP globally, a demographic dividend that has created vast base of young and educated workforce... yet, while much has been discussed on India's contribution to the world on the strength of our vast intellectual resources, unfortunately when it comes to innovation, we have a long way to go.

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Marc Kneepkens's insight:

Amazing to see these numbers. India's population between 15-29 is larger than the total population of the USA.

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