Paytm’s local focus via MyStore provides a key advantage in India’s digital commerce expansion, says GlobalData

Paytm announced its entry into social commerce in Feb 2020 with its MyStore functionality, after carrying out beta version of the app for a while. MyStore is Paytm’s second vertical into digital commerce after its Paytm Mall, an ecommerce platform available to Paytm users. With MyStore, Paytm aims to have early movers advantage in the fast developing social commerce industry in India, says GlobalData, a leading data and analytics company.

Social commerce in India will be the next wave of digital commerce following the immensely successful and growing ecommerce channel in the country. Ecommerce has been largely successful in major metropolitan and big cities in India, and is slowly penetrating into tier II and tier III cities now, however, a large section of Indian customers still do not shop online on big ecommerce platforms.

Hrishabh Kashyap, Retail analyst at GlobalData, comments: “In India, a large section of society is still new to the entire digital world, especially the non-metropolitan community. Most of the ecommerce websites use the English language while targeting non-English speaking communities. Also, ecommerce websites have marginal presence from regional offline retailers; hence fail to cater to the local needs and preferences of local communities. This is where social commerce plugs in the gap through its unique business model. It serves the people in local languages, leveraging the trust factor between the buyer and the seller (reseller).”

Social commerce’s greatest strength lies in the simplistic business model it follows. The B2B2C model has primarily four elements — Buyers, Sellers, Re-sellers and the Platform. Buyers choose products based on their choices and preferences which are showcased to them by resellers who happen to be close friends, relatives, or trusted influencers on social media. Resellers get commission on each purchase, so does the platform for facilitating the sale. Sellers benefit by selling the product and don’t have to worry about the operational expenditure incurred in going digital.

With its latest launch, Paytm now directly competes with some of the established firms like Meesho backed by Naspers and Facebook, Matrix-backed DealShare and Kalaari Capital funded Shop 101. Ever growing digital reach and smartphone penetration plus Paytm’s own expanding subscriber base in India tick all the right boxes for the platform, however, there are certain aspects that they need to be wary of.

Kashyap concludes: “Social commerce is primarily focused on not so affluent and brand conscious customers. The high rate of returns coupled with low ticket purchases makes it costly for the platforms to operate profitably and is purely dependent on the scale for green bottom-line figures. It is extremely important to cater to the regional taste and language while pushing the product in a market which requires huge investments.  

“Payments remain a challenge as most of the customers prefer cash on delivery mode as they are either unsure of the seller or hesitate to pay online.  However, with investors such as Alibaba, eBay and SoftBank, there is the potential to expand significantly by using its local focus.”

More Media