Alibaba-backed Paytm has entered the travel segment with the launch of its Bus Ticket Marketplace. Paytm's decision to enter the travel segment is part of its strategy to enter as many new categories in coming months to grow its gross merchandise value ( the amount of transactions done on a portal) to $3-4 billion by the end of 2015.
The company has tied up with four travel aggregators to get almost all bus routes on its system. Once the marketplace expands to encompass hotels and travel agents, the service providers will be able to put up their inventory using a do-it-yourself platform provided by Paytm. Consumers will be able to avail these services very conveniently through the Paytm app.
Vijay Shekhar Sharma – Founder,Paytm said in a statement that, “The online travel category in India was estimated to be worth over $8 billion in 2014. We want to tap into this potential to give an enhanced experience to our users while booking their bus tickets. Going forward, we also plan to start signing up hotels and travel agents on the platform.”
Paytm, the mobile commerce brand of mobile solutions company One97, started as an mobile recharge and wallet app in 2010. It entered into commerce, which is selling of physical goods online, early this year and wants to make Paytm a $100 billion company well before larger rivals Flipkart and Snapdeal. The wallet business contributes about 60 per cent to overall revenues, with e-commerce at 40 per cent. Sharma expects e-commerce to become 60 per cent by the end of this year. The e-commerce arm achieved Gross Merchandise Value of $1.5 billion in six months; Flipkart and Snapdeal took 5-6 years.
The company, which raised about $575 million from Jack Ma-led Alibaba, has created a business model that differs from the current wisdom of driving consumer buying through deep discounts. Instead, it focuses on offering unique products.
Paytm has 30,000 sellers and wants to take that number to 100,000 by the end of the year.
Sharma is also diligent in spending cash. Compared to the bigger players, Paytm’s burn rate on marketing and advertising is less than the industry average of 5 per cent. Flipkart, with $4 billion in sales, spends $60 million every year on marketing and customer acquisition.