Alibaba and Ant Financial Offload Stakes in India’s Paytm Mall

Paytm E-commerce Private Limited (PEPL), the parent entity of Indian e-commerce marketplace Paytm Mall, announced on May 15 that its strategic focus has shifted from traditional physical e-commerce to B2B exports and “Open Network for Digital Commerce.” With this strategic adjustment, Alibaba Group and Ant Financial have exited from investments in PEPL and its Paytm Mall.

PEPL bought back the entire stake held by Alibaba (28.34%) and that held by Antfin (Netherlands) Holding (14.98%), a total of 43.32%, for 420 million Indian rupees ($5.4 million), according to the company’s filings.

Paytm Mall’s valuation fell from its highest level of $3 billion to $13 million following news of Alibaba Group and Ant Financial’s exit.

Paytm Mall, once the third largest electronics company in India, received a total investment of $450 million from SoftBank and Alibaba 14 months after its launch, giving it a valuation of $2 billion and promoting it to the ranks of e-commerce unicorns in India. Together, the company raised more than $800 million from Alibaba, Ant Financial, SoftBank, Elevation Capital and eBay.

When Paytm Mall was founded, the Indian market was dominated by Amazon and Flipkart, which had not been acquired by Walmart at that time. However, Paytm Mall’s cash-burning model has presented it with a growth dilemma.

Paytm Mall’s net loss reached $245.65 million in fiscal year 2018, almost 150 times the net loss of $1.86 million in 2017. The company’s financial costs have also multiplied, swelling from $66,852 to $6 million.

However, Paytm Mall’s market share in India dropped from 5.6% in 2017 to 3% in 2018. Under pressure from investors, Paytm Mall began to take remedial measures, including closing its e-commerce freight service in India.

This change has inevitably led to the loss of users. Since then, the daily shipment volume of Paytm Mall has shrunk from 150,000 units in October 2018 to 35,000 units in March 2019.

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According to a report released by Forrest Inc., after Paytm Mall experienced huge losses in 2018 and 2019, Alibaba refused to inject further capital into Paytm Mall, shifting its investment focus to Paytm’s cloud computing and payment platform.