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E-COMMERCE BATTLE

eBay partners Paytm Mall in fresh attempt to crack Indian e-commerce

REUTERS/BECK DIEFENBACH
Making a comeback.
By Sangeeta Tanwar
Published Last updated This article is more than 2 years old.

In a renewed bid to get a foothold in India’s growing e-commerce market, the US giant eBay is turning to Paytm Mall.

The San Jose-based firm is all set to pick a 5.5% stake in the online marketplace owned by Vijay Shekhar Sharma’s One97 Communications.

While the companies did not disclose the deal value, eBay is said to be investing $165 million (Rs1,136 crore) in the Noida-based Paytm Mall, nearly doubling its valuation from $1.5-2 billion last year, to $3 billion, according to news reports.

“We are deeply committed to India and believe there is a huge growth potential and significant opportunity in this dynamic market. This new relationship will accelerate our cross-border trade efforts in a rapidly growing market,” Jooman Park, senior vice-president, APAC, eBay commented on the partnership.

Following the deal, select inventory from eBay will be made available on Paytm Mall. “We have done a recce. More than one million eBay products will be made available on Paytm Mall in a month’s time,” Sharma told Mint newspaper on July 17.

Paytm Mall, the third-largest player in India’s e-commerce market, competes with Walmart-owned Flipkart and Amazon India.

Fresh attempt

Established in 1995, eBay is one of the world’s largest online marketplaces, with a gross merchandise value (GMV) of $95 billion in 2018.

Its international success notwithstanding, India has proved to be a tough market for the company. eBay was one of the early entrants in the Indian online market, starting operations in 2004 through Bazee.com which it acquired in 2013.

However, with growing competition from Flipkart and Amazon India, the company exited the Indian market. Flipkart bought eBay in 2017 but shut down its local website eBay.in, the next year.

Since exiting India, eBay has been slowly making its way back in the country. It relaunched eBay.in in January this year with a focus on partnering India’s small- and-medium-sized businesses to sell their products to eBay’s 182 million customers globally.

Now, with its investment in Paytm, eBay is eyeing a greater share of India’s online retail sales that are expected to more than double to $71.94 billion by 2022, from $32.7 billion last year, according to market researcher eMarketer.

But how far will eBay be successful in recovering the lost ground?

Right fit?

“Even as eBay eyes India’s e-commerce space again, the company had very few options to choose from. With Flipkart and Amazon India dominating the market, it does not have much of a choice but to go with the third-largest player that is Paytm,” Yugal Joshi, vice-president of consultancy Everest Group told Quartz.

Experts are of the view that the deal is too small for any company to make a meaningful impact.

“Indian market is clearly a duopoly between Amazon India and Flipkart. A 5.5% stake does not appear to be too significant to give eBay an advantage or scope to understand Indian e-commerce market and make an impact,” added Joshi.

A dominant view in the industry is that given the fierce competition in the e-commerce space, eBay needs to take a call on which segment it wants to have a play. “There are smaller players who say that they are into fast-fashion, a space that a specialist such as Myntra occupies, or a food brand which is into organic food segment. But the challenge here is—how does one scale up,” said Joshi.

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