After eBay backing, Paytm Mall separates functions from parent entity

Amidst several rejig, changes in the company's business model, Paytm Mall has finally decided to separate all functions from its holding company One97 Communications.

According to the company, it's going through a complete rebuilding exercise and wanted no common workforce among the other business - payment and e-commerce. The only exception is Paytm boss Vijay Shekhar Sharm, who will continue to lead both firms.

The reorganising strategy may work for the Softbank-backed firm, that has been claiming to cut burn rate through shutting down warehouses and eventually pivoting to an asset-light model.

Since January, the only positive thing that happened to the company was getting eBay as a backer when the early investors i.e Softbank and Alibaba refrained from taking part in the round.

eBay holds about 5.59% stake in Paytm Mall for about $160 million investment. Interestingly, Paytm Mall's valuation soared to $3 billion. The eBay backing seems to have brought back the confidence for Paytm Mall as Rudra Dalmia, chief financial officer and board member of the company reveals the aim of clocking 1.5X revenue and cutting cost by one-fifth in this year.

Besides, Paytm Mall will also leverage the eBay brand to ramp up its presence across the country as well as overseas. To generate more revenue through advertisement, PoS and marketing, the Noida-based firm has integrated deal and discovery platform Nearbuy.

Curiously, Paytm is pushing Nearbuy through eBay that was adding no value since its acquisition in December 2017. According to some rumours, Nearbuy was even on the verge of shut down.

Paytm Mall has introduced gift cards, launched the eBay international store with merchandise, and has tied up with Future Group, Reliance Industries and BigBasket for its offline-to-online (O2O) business.

In a nutshell, Payt Mall aims to bring more and more users for transactions on the platform for movie ticketing, travel, and games. On the other side, 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.

While Paytm Mall's strategy to work as a separate unit from the mother entity reflects the confidence after several setbacks including shifting focus to O2O, top-notch exits, and forensic audit for a multicrore scam, the firm's decision to cut burn rate and rebuilding may turn into a positive outcome.

The development was reported by ET.