Paytm earmarks Rs 500 crore for festive season push

NEW DELHI: The impending festive season promises dazzling fireworks for Indian e-tailers looking to earn a quick buck, but the opportunity comes with its own share of costs.

A few days after Delhi-based online marketplace Snapdeal announced its plan to invest Rs 660 crore to beef up its supply chain ahead of the festive season, Alibaba-backed mobile wallet and e-commerce firm, Paytm, told TOI on Friday that it is setting aside Rs 500 crore to spend on marketing and logistics.


E-commerce companies in the country, such as Snapdeal and Flipkart, have struggled to cope with sharp spikes in demand, especially during flash sales and festivals. Online shoppers, frustrated with misplaced orders and sold-out stocks, had taken to social media to vent their anger.

In October last year, Flipkart founders Sachin Bansal and Binny Bansal had to tender a public apology after a multitude of complaints over the company's Big Billion Day Sale. Paytm, which has just started focusing on its e-commerce business, does not want to take that chance.

"On an average, we do around 1.5 million digital and physical transactions per day. We expect it to go up by two-to-three times in the coming days. We are spending a large part of this Rs 500 crore on software and hardware for our logistics partners. A significant amount is being spent on training our sellers on how to operate in an e-commerce environment. If the number of orders suddenly goes up, they should know how to handle the packaging," said Saurabh Vashishtha, VP, business, Paytm.

Another big cost for Paytm would be cashbacks. Instead of burning cash on discounts, which other players do, Paytm provides cashbacks to customers, who shop on its website. These customers can use the money funneled through their Paytm wallet to avail rides on, let's say, taxi-hailing apps such as Uber.

Vashishtha, however, refused to mention the amount Paytm plans to burn on cash backs. "We will be subsidizing warehousing costs for our merchants and introducing new categories such as ethnic wear and large appliances that are in great demand during the festive season. Till now, we haven't really advertised for our e-commerce division. We will also spend on that," said Vashishtha.