eBay acquires 5.5% stake in Paytm Mall with $150 Mn investment

Finally, the buzz around Paytm Mall - eBay deal got settled down. The US-based e-tailer has picked up 5.5% stake in the Alibaba-backed company with a probable investment of $150 million.

Entrackr first broke this story in March when sources indicated that the valuation of Paytm Mall will see a massive haircut with the eBay investment. The current valuation could not be verified, albeit some media reports quoted it around $3 billion, which is highly unlikely.

Like Berkshire Hathaway investment in Paytm, this will be the first-ever investment from US-based investor for Paytm Mall which is running on the capital infused by Softbank and Alibaba.

The scenario has changed and Softbank and Alibaba seem to have lost hope on Paytm Mall which is why they both decided to not put in even a dollar despite owning most of the company between them.

The deal is that Paytm will funnel customers from Paytm to eBay. Hence we should likely expect more of this investment going to Paytm as revenue for sending users to eBay.

Now, eBay will open a store on Paytm Mall, which will provide 130 million of Paytm and Paytm Mall's customers with access to its global inventory.

After Snapdeal and Flipkart, Paytm Mall will be the third bet for the company in Indian e-commerce space via investments.

Commenting on the eBay's investment, Paytm's founder Vijay Shekar Sharma told ET that it's is a clear testament of the company's turnaround, and the shopkeeper commerce model (O2O) being validated by a new set of investors.

Henceforth, shopkeepers of Paytm Mall will be able to source over a million unique international products from eBay's global base. Sharma added that the cross border business will account for about 10-15% of Paytm Mall's overall sales in the next year.

The development comes as a rejoice for Paytm Mall as well as eBay as both were losing grounds in India to their arch-rivals. The company's decision to shift to O2O model was a fallout of running a business on the back of cashbacks and discounts.

Paytm Mall is not only dealing with shifting the business model, but it's also going under major rejig in terms of top leadership and Board of Directors. And the reason behind restructuring in management was the forensic audit done by E&Y where it found lapses and alerted Paytm Mall about some employees’ involvement in a potential scam.