Paytm, The Taobao Model And Cricket – Strategy With RS

‪#‎Paytm‬ gained traction as a mobile wallet player – through which subscribers could pay for a range of products & services – phone recharge etc.

Of late, Paytm seems to be inspired by ‪#‎Taobao‬, an ‪#‎Alibaba‬ promoted platform. Like Taobao, it wishes to metamorph into a mobile application based horizontal marketplace for connecting buyers and sellers & offering them payment gateways to consummate their deals.

Like Taobao it will focus on providing a platform for small business, individual entrepreneurs, local suppliers from unstructured and unorganized trade who are currently under-served. Taking on board the Indian way of doing business, in which negotiation is an integral part of buying process, it will have a ‘chat’ feature, which will enable the buyer & sellers to engage in ‘negotiation’. Once the negotiation is complete Paytm will offer payment options to consummate the deal. Towards this end it offers several payment options:

1. Direct payment through Paytm Digital wallet. Buyers may prefer to pay through it since they will get an additional discount over & above the one offered by the sellers – by Paytm!
Result: When 2 people simultaneously give discount it becomes steeper!

2. Escrow account facility. This offering is designed keeping in mind that both buyers & sellers may be circumspect of each other. The buyer may be worried – what if the seller does not supply goods as promised & the payment has been made to them? Or the supplier may be anxious – what if I supply the goods & the payment does not come? To circumvent these apprehensions Paytm offers an ‘escrow’ payment facility – when a buyer makes the payment towards the purchase, it will not be transferred to supplier; it will be held in an escrow account managed by Paytm. Only after the buyer confirms that the product is per specifications that Paytm will release the fund kept in the escrow account either after deducting a nominal commission (2.5%) or not at all.

3. ‪#‎RuPay‬ Card – It is planning to launch RuPay credit card, which is an Indian domestic card scheme, conceived and launched by the National Payments Corporation of India (NPCI). It has similar features as ‪#‎MasterCard‬ / ‪#‎Visa‬ & for people familiar with Credit card / Debit Card can chose this payment option.

After creating this extensive infrastructure Paytm desire to become a market place of choice for millions of Indians. For that it has chosen cricket, the game which is a choice of millions! It has become the title sponsor of the ‪#‎IndianCricket‬ team for the next 4 year at a fee of Rs 203 crore. It believes that the by riding on cricket it will become a familiar household name in India.

Insight: People tend to do business with a brand with which they are familiar, comfortable & emotionally attached. Cricket has all these attributes & more & can help Paytm acquire them for itself. Once that happens then Paytm would give ‪#‎Flipkart‬ & ‪#‎Snapdeal‬ & ‪#‎Amazon‬ a run for there money!

Lessons for us: We should build an eco system / universe for our product & service, which will offer a seamless experience to all our stakeholders by meeting all their requirements. Once that happens then our competitors will find it difficult to wean away our customers.





In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous  Strategy with RS posts can be found here