Paytm Mall shuts down warehouses as it pivots to asset light model

Paytm Mall has been on a cost-cutting measure from the beginning of this year. After pulling back cashbacks from the commerce business, the Noida-based company has decided to shut down warehouses across many cities.

The move would help Paytm Mall to control burn-rate as operating warehouses and logistics service (via third-party integration) is capital intensive play. The decision of shutting down warehouses is in sync with its pivot to an asset-light model. The company has been focusing on offline to online model.

Since Paytm has relation with millions of merchants who are using its payment service, listing their inventories on Paytm Mall is an easy affair. Local third party logistics services will do the delivery part for the sellers.

The shutdown of warehouses also places Paytm Mall in direct competition with Snapdeal. The Gurugram-based company has also been focusing on the pure-play marketplace model. It doesn’t operate warehouse on its own.

Paytm Mall had recently raised $160 million from eBay at a valuation of about $2.9 billion. However, it’s main backers - SoftBank and Alibaba didn’t participate in the funding round.

Paytm Mall had gone through a series of troubles since the end of last year. After raising $445 million in June 2018, the firm had gone berserk on cashback centered strategy. However, the model didn’t work for long and these plans failed miserably.

The funding from eBay has come after the firm went through a forensic audit for fraud hatched by internal employees. Paytm Mall’s Chief Operating Officer (COO) Amit Sinha also resigned in the wake of the incident.

Importantly, Paytm Mall’s focus on O2O model isn’t new. It has been following the model ever since it raised capital from Alibaba. While the company has been emphasising on an altogether fresh strategy for its commerce business, it would be interesting to observe - how this pivot performs for the Vijay Shekhar Sharma-led firm.

The development was reported by TOI.