How Paytm Mall is Reducing Logistics Cost by 60%?

E-retailers follows O2O model to cut down on logistics cost. Encouraged local retailers for sourcing and delivery, hence cutting warehouse requirements of the company. Targets Rs. 17,000 crores by the end of FY '20

Paytm Mall, an e-commerce players has upped its game is now in the striking the distance of turning profitable. It is targeting to become EBITDA positive within 2 years on the back of its innovative approach to solving the logistics cost. In India, logistics is the largest contributor to overheads and accounts upwards of 30% cost of operations for any e-commerce company. Paytm Mall has successfully controlled this cost with its innovative O2O (Online-to-Offline) model, where sourcing and delivery are done by local retailers.

Under its O2O model, Paytm Mall has signed up with sellers who were already using Paytm payment services, therefore bringing them online to list and sell their products on PaytmMall. This has helped Paytm Mall on multiple fronts. First, it has drastically reduced the cost as the company does not need to own and operate its own warehouse. Secondly, the sellers use the local courier services for delivery, thereby bringing down the time & cost of deliveries. Thirdly, the cost of acquiring sellers has gone down as most of these sellers were already accepting payments using Paytm. With 3 lakh merchants on its platform, Paytm Mall has the largest seller base in India who delivers the products to the customers themselves.

Srinivas Mothey, Sr. Vice President at Paytm Mall said, “Earlier many of our sellers were using our warehouse system for managing delivery. Now our sellers manage sourcing, delivery & returns themselves and we are focused on providing them with technology support and training them to come online. With this new model, we have dropped almost 30% sellers but have managed to save up to 60% cost. Therefore, we have become a technology provider in logistics instead of being a logistics service provider



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