Paytm Mall to shut down warehouses in cost-cutting initiative
Paytm’s multi-brand e-commerce platform Paytm Mall has decided to shut down its warehouses and adopt a local logistics model to reduce costs and strengthen compliance to foreign direct investment norms.
Paytm Mall will forgo its large warehouses in favour of hyper-local courier services for delivery, which will reduce the business’ logistics costs and FDI regulations compliance, TNN reported.
As Paytm Mall will no longer have to bear the cost of warehouses, it can reduce its own costs and streamline its business, with customers benefitting from faster delivery times facilitated by local centres.
“The cost of acquiring sellers has gone down as most of these sellers were already accepting payments using Paytm,” said senior vice president and CFO of Paytm Mall, Rudra Dalmia, as reported by TNN.
“In 2017-18 we were doing a course correction,” said Dalmia. “In this business, one can only be profitable if one becomes a true marketplace and not follow an inventory-based model because the latter comes with the baggage of high costs. Both our partners, Ebay and Alibaba are making money.”
Paytm Mall is currently working towards being earnings before interest, tax, depreciation, and amortisation positive in the coming two years. The business also recently received a large investment from eBay.
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