Sales of Paytm Mall, the ecommerce unit of digital payments company Paytm, have been falling sharply, with the company also losing significant market share in a segment dominated by US-owned companies Flipkart and Amazon India.

The market share of Paytm Mall almost halved in 2018 to 3 percent from 5.6 percent in 2017, according to data by Forrester Research. In terms of gross merchandise value — a measure of the growth of an ecommerce business — sales slipped to $800 million in 2018 compared with $1 billion in 2017, according to industry sources. Losses were at Rs 1,787 crore on total revenue of Rs 775 crore in FY18.

The fall in GMV (gross merchandise volume) was despite the huge amounts of cashbacks offered by the company on its platform, the sources said, asking not to be named.

Paytm Mall gained unicorn status last year with a valuation of $2 billion after funding of $450 million from Japan’s SoftBank and Alibaba of China.

The declining fortunes of Paytm Mall are a shining example of the struggles of ecommerce players against the Indian unit of Amazon Inc and Walmart-owned Flipkart that are flushing millions of dollars into the Indian market.

A report last month by Barclays said in FY18, Amazon generated $7.5 billion of GMV compared to $6.2 billion by Flipkart, excluding its units Myntra and Jabong, while the total GMV was similar when including Myntra and Jabong in the financial year ended March 31, 2018.

The investment bank said Amazon and Flipkart Group are neck and neck at a $11.2 billion GMV run rate for FY19.

India’s over $20-billion ecommerce market has slowed in the past two years, but is still among the fastest growing in the world.

Sellers on Paytm Mall have also cited trouble over falling sales, and said the company has asked them to not ship stock to its warehouses over the last few days but to fulfill orders directly with the customers. This is indicative of falling orders, they said. They too requested anonymity.

Paytm Mall has not been able to create a positioning, other than cashbacks, said Satish Meena, senior forecast analyst, Forrester Research.

"For Paytm the bigger problem is on focus on a particular business, given that it is doing multiple things, and it has not been able to execute its O2O strategy for Paytm Mall," said Meena.

"Flipkart and Amazon have a clear positioning on customer experience, while Snapdeal and Shopclues have a position around long-tail products," Meena added.

Paytm Mall did not respond to specific queries on market share. The company’s website shows that it had fulfilment centres in 11 regions in the country, which it said was owned by third-party players.

Paytm Mall also launched a wholesale business late last year, following in the footsteps of Amazon and Flipkart. A company source said there will be no impact on its wholesale business due to the recent FDI (foreign direct investment) rules.

Ecommerce firms in India cannot sell products via entities in which they have an equity interest or push sellers to sell exclusively on their platforms from February 1 under the new rules. The Paytm Mall source said the company does not have related entities that are sellers on the marketplace.

First Published:Jan 22, 2019 8:44 PM IST