In the previous monetary, Paytm E-commerce, which operates as Paytm Mall, saw its income from process point 10293% year-on-year, but the cashback schemes that were powering this exceptional growth were also departure the individual deep in the red. Last September, it had earmark Rs 501 crore as cash backs during its celebratory sale to struggle with Flipkart's Big Billion Days and Amazon's Great Indian Festival.
In the bargain, the Alibaba- and Softbank-backed ecommerce undertaking supposedly posted a net loss of Rs 1,787.55 crore in FY18 as alongside a loss of Rs 13.63 crore in the previous fiscal. And, hence, Paytm Mall has reportedly now discontinued the cashback model, which is unconstructively impacting sales on the platform.
Paytm Mall has slash cash backs by more than 80% across categories counting grocery, electronics, and fashion, for the strategic shift away from a warehouse-based delivery plan.
Sellers on the platform told the daily that the extraction of the offers has caused sales to slump. "Sales have dropped by more than 90% in grocery; people are clearly not buying any more. The cash back offer was up to a maximum 35%, but Paytm Mall stopped up giving cash back from December 2 as it required being margin-neutral," said one of the largest grocery sellers on Paytm Mall.
Paytm Mall's center till now has been on groceries and daily use products – unlike Amazon and Flipkart that contemplate more on categories such as mobile phones and electronics – and to that end it has worked closely with companies like Hindustan Unilever, Parle, Nestle, ITC, Dabur, Mondelez, and Coca-Cola for joint promotions and collaboration for restricted product launches.
In the good old days from a consumer viewpoint, anything bought on Paytm Mall would fetch a cashback of Rs 50-60, which transformed into movie tickets and refresh vouchers. Now, not only are there no attractive hooks to entice eyeballs, but the company has also introduced shipping charges. So the buzz is that inventory worth crores are stuck in the warehouses.
"We have cut cash-backs across the category. This is part of the plan to… build stronger O2O [online-to-offline] play, where we are investing big this year," Paytm Mall founder Vijay Shekhar Sharma. "We are removing cashbacks from warehouse complete items and directing them toward physical store supplies. This saves logistics costs and gives us more to share with the consumer and merchant."
Explaining this intended shift Sharma added that while most brands in the country are well distributed across thousands of cities and towns, warehouse account for online merchants is concentrated in top 20 to 30 cities.
According to Sharma, the grocery O2O model has become net positive in select markets, prompts the company to remove cash backs from warehouse-led sellers where double costs apply that is of the warehouse as well as couriering. "The focus is on local offline sellers and leverage local deliveries versus delivering a soap bar in Agra from the Gurgaon warehouse," he added.