Alibaba plans tighter integration of Paytm Mall with BigBasket & XpressBees

Paytm Mall, in which Chinese internet giant Alibaba and its payments affiliate Ant Financial hold a majority stake, is chalking out tighter integration with players like online grocer BigBasket and logistics company XpressBees as they build out their ecosystem.
 
Alibaba Group has recently invested in BigBasket, XpressBees and restaurant discovery and food delivery platform Zomato.
 
Working with these companies will help Paytm Mall, which claims it will exit FY18 at a gross merchandise volume (GMV) run rate of $3 billion, target an ambitious $10 billion run rate by end of FY19.
 
It plans to do this by riding on the back of high-GMV products like laptops and smartphones, high-repeat purchases like grocery and FMCG, and impulse-driven purchases like fashion.
 
Just a few weeks into Alibaba's investment in BigBasket, Paytm Mall is in the process of integrating BigBasket on its platform and mobile app and is expected to be up and running in the next 3-4 months. What this means for customers is that they would be able to purchase grocery from BigBasket through the Paytm platform as well, a revenue-sharing, exclusive partnership between the two players.
 
"A BigBasket store will be opened on the Paytm Mall app and web version," said Amit Sinha, the chief operating officer at Paytm Mall. "BigBasket has a complementary set of offerings for Paytm Mall. We want to work on a full basket rate and BigBasket will play a role in fulfillment."
 
This integration also means that Paytm Mall, which is currently positioned as the number three Indian e-commerce player and BigBasket, which is a market leader in the Indian online grocery space, have now joined forces to compete with e-commerce incumbents Flipkart and Amazon India, both of which are making an aggressive push into this space. More than half of Paytm Mall's overall orders trickle in from grocery and FMCG, which is expected to go up to 60% with the BigBasket partnership.
 
Another recent strategic investment made by the Chinese internet conglomerate was ?224 crore into logistics player XpressBees, a spin-off from e-commerce company FirstCry. XpressBees currently fulfills half of Paytm Mall's shipments and this share is expected to go up to 60% eventually. Sinha said that Paytm Mall and XpressBees are working together to co-develop logistics solutions to achieve optimisation and seamless delivery experience. Once created, it will be offered to all the logistics partners along with XpressBees.
 
Paytm Mall is also an investor in XpressBees. "It's an ongoing task. They (XpressBees) are building the algorithms based on our inputs because we are the consumer-facing platform," said Sinha, adding that the two entities plan to co-own the IP.
 
Experts tracking the space believe that Alibaba couldn't invest in Amazon and Flipkart (due to the presence of SoftBank and Tiger Global), which has steered them towards Paytm Mall and other strategic investments as a way to tap into the overall retail and supporting ecosystem in India.
 
"It makes sense for all the Alibaba portfolio companies to work harmoniously and create value for themselves and Alibaba, rather than competing with each other. It will cut down on speed-to-market, which is crucial," said Anup Jain, managing partner at Redback Advisory Services.
 
Paytm Mall is also betting big on its online-to-offline (O2O) model, which allows customers to get online discounts in the offline partner stores as well. Currently, with around 75,000 shopkeeper partners, this model makes up to half of the company's overall revenues.
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