Using its association with Chinese giant, the Alibaba group, e-commerce platform Paytm is planning to bring Indian sellers on board to source products from China at cheaper rates as well as help them with logistics and payments.
Around 25-30 Indian merchants with a credible track record have already been selected, the company informed.
They will be incubated under categories including home and kitchen, micro innovation including USB cookers, etc, fashion and mobile accessories and western fashion to begin the pilot.
Paytm plans to get at least 10,000 merchants on board by the end of this year and give them access to more than 5-million products from China. Sellers, who source using Paytm ties are allowed to sell on other marketplaces as well including Flipkart, Snapdeal, Amazon, ShopClues.
Bhushan Patil, who is heading this initiative for Paytm, said, “Inventory is the third pillar of commerce, after logistics and payments, which requires optimisation in India.”
Patil was also the head of Alibaba Group Holding’s wholesale international business before he joined Paytm three months back. This is move more in-line to help sellers source effectively and get better margins, while the company’s main focus still remains on scaling its B2C commerce business.
“We expect the Indian SME’s cost to come down three times with our direct connect. Most SMEs don’t import directly, they import from local distributors, and there may be 2-3 steps shuffling, we connect directly,” Patil said.
He added, “We also offer bonded warehousing facilities, leveraging our tie-ups with import houses and trusted payments with our partnership with Citibank, which further reduces costs at scale.”
This sourcing business will help Paytm’s existing sellers to gain extra capital to buy additional inventory in order to meet the anticipated demand.
“Sellers can buy in bulk from China at cheap prices, get goods to India and store in our bonded warehouses until products need to be sold. That way the seller pays duties, which are close to 30%, at the time of sale and not in bulk,” Patil explained.
If the pilot turns out to be a success, Alibaba might even look to back the model, Patil revealed.
