As a part of the pilot, the company is said to choose 25-30 merchants with credible track records, enabling them to source products under categories of home and kitchen, mobile accessories, western fashion and micro innovation including USB cookers, etc.
By the end of this year, the programme plans to on board close to 10,000 merchants giving them access to more than five million products from China.
This move is more in line to help sellers source effectively and get better margins. But, Paytm says their focus will remain on scaling the B2C side of the commerce business. According to Bhushan Patil, inventory is the third pillar of commerce for Paytm after logistics and payments. He said,
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 there. However, we connect directly and also offer bonded warehousing facilities. We also look to leverage our tie-ups with import houses and trusted payments with our partnership with Citibank, which further reduces costs at scale.
Further, Bhushan says that when sellers buy in bulk from China and store products in Paytm’s India warehouses, they are only expected to pay duties (close to 30%) at the time of sale and not in bulk.
Paytm’s existing lending programme will also help these sellers gain extra capital in order to buy additional inventory to meet the anticipated demands. If turned successful, Alibaba is looking to back the model with its expertise.
The bumpy ride
The news comes at a time when e-commerce marketplaces and sellers are having quite a frictional relationship.
Very recently, revolting against Flipkart’s new return policy, a small group of merchants threatened to exit the marketplace.
Just last week, media reports emerged that many sellers are pulling their products back and already taken out one million stock keeping units (SKUs) from Flipkart. However, Flipkart denied the statements.
Moreover, online marketplaces are allegedly said to be making unilateral decisions, worrying sellers. Commission changes, non-transparent communication, and reconciliation seems to be some of the worries for online sellers.
On seller commissions, Amazon was reported to decrease its seller commission by one to seven per cent, Flipkart increase it by five to nine percent while Snapdeal is said to decrease its commission for select sellers.