eBay has agreed to a deal to buy a minority stake in one of India’s largest e-commerce platforms Paytm Mall for a reported $150-200 million in a fresh attempt by the San Jose, California based firm to gain a foothold in India’s highly competitive and booming online retail industry which is expected to be worth over $200 billion by 2026 – an unprecedented growth pattern that would be triggered by the growth in scope and pervasiveness of internet & smartphone service providers across the Indian subcontinent.
Both firms did not reveal financial details regarding the terms of the deal, but internal sources in close proximity of the deal, reported that eBay is set to invest about $150-200 million in Paytm Mall, nearly doubling the Indian online retail company’s value to an estimated $3 billion, compared with an estimated value of $1.5 billion last year.
Some details that emerged from the agreement indicates that eBay will make its inventory of more than a million cataloged products available for purchase to users on Paytm Mall’s platform.
Vijay Shekhar Sharma, founder and chief executive officer of one97 communications, the parent group of Paytm mall said in an interview following the deal; “we will jointly select the inventory we want to bring here, it will be done in a months time”.
This agreement will benefit hundreds of Paytm customers as eBay will continue to operate & run its existing online portal in India the company added.
The new alliance between both firms is a promising signal for Paytm Mall which early this year experienced some financial Setback’s due to its decision to cut back on 80% of the ‘cashbacks’ it provided to customers which resulted in a 90% reduction in sales in certain categories due to the firm pulling back on one of its foremost businesses.
India: The New Battleground for US eCommerce Retail Giants
This deal makes it the third time eBay, a US-based multinational eCommerce corporation headquartered in San Jose, California has tried to get a substantial stake of India’s booming eCommerce market with various investment moves and subsequent exits due to aggressive competition from the likes of Amazon, an equally prominent US-based eCommerce platform which has been active in the Indian eCommerce arena since 2012. Some of eBay’s most notable investments include investing over $180 million in Snapdeal one of India’s larger online marketplaces.eBay India subsequently sold Snapdeal to Flipkart which was the largest independent Indian eCommerce company before it was acquired by US retail giant Walmart in 2018.
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Will eBay’s Paytm Mall Acquisition tip the scales in its favor?
Corporate and financial analysts are of the opinion that the deal is too small for eBay to directly influence the country’s intensely competitive eCommerce market which is currently dominated by Amazon India and Flipkart with Paytm Mall currently regarded as the third-largest player in India’s online retail industry.
The current 5.5% stake acquisition by eBay does not appear to be too significant to tip the scales in its favor or place it at an advantage or impacting the current status quo, but rather gives more power to consumers who are regarded as the true power players in India’s eCommerce market. Although the current investment by eBay grants Paytm Mall the necessary funds and backing to match its rivals, there are concerns that the injection of more capital into the eCommerce ecosystem will only disrupt the market further as other marketplaces will come up with better deals and more appealing offerings.
In the long run, the average online consumer is the one set to benefit from this intense growth in competition in the country’s eCommerce arena as they are being offered a larger variety by competing corporations who are focused on outmatching each other on price.
Summing it up
With corporate America vying to dominate India’s eCommerce industry, the question now remains not only who will ‘win’ this dual but also what strategies eCommerce sellers can employ in order to compete in such a versatile and diverse market. Many sellers may be wondering if they should try and get a piece of the action by becoming multi-channel vs. single-channel. There is no right or wrong answer and only time will tell what will become of India’s eCommerce industry.