US-based online marketplace eBay has invested in Paytm Mall, owned by Paytm e-commerce, by picking up 5.5 percent stake in the online shopping app.
“As part of this collaboration, eBay is making an investment in Paytm Mall for a stake of approximately 5.5 percent,” Chief Executive Officer Devin Wenig said, according to Reuters.
The size of the deal is estimated to be a little over $150 million, according to media reports. With this investment, the Noida-based Paytm Mall's value will be close to $3 billion, according to The Times of India quoting sources in the know of the development.
We’re expanding our presence in India through an agreement with @PaytmMall that will make eBay inventory accessible to hundreds of millions of Paytm Mall and Paytm customers: https://t.co/O4t8fu94NJ pic.twitter.com/ZiPBJNshXQ
— eBay Newsroom (@eBayNewsroom) July 18, 2019
The eBay investment will be a boost for Paytm Mall at a time when the company has undergone major restructuring over the last few months in the business model with offline (O2O) commerce. Besides, it also tackled a cashback fraud, said the report.
eBay also said it had reached an agreement with Paytm Mall to bring its global inventory onto Paytm’s marketplace, reported Reuters.
“This investment is a clear testament of our turnaround, and the shopkeeper commerce model (O2O) being validated by a new set of investors,” Vijay Shekhar Sharma, founder of Paytm, was quoted as saying in The Economic Times.
In May this year, Paytm Mall had unearthed a fraud of up to Rs 10 crore following a probe into a large percentage of cashback earned by small merchants and de-listed hundreds of sellers from its platform apart from sacking many employees, reported PTI.
The e-commerce firm then engaged consulting and audit major Ernst & Young (EY) to investigate the cashback fraud involving some of its employees and merchants.
Some employees of the Alibaba-backed company allegedly worked with third-party vendors and created fake orders to siphon off cashback offers.
The investigation had been going on for almost a fortnight and some employees had also been fired.
Sharma had said that actions against the wrongdoers were being taken. These included de-listing "hundreds" of sellers to ensure there are only brand sellers on the platform and not the "mom-and-pop shops", he had said adding that "tens" of employees have also been sacked, reported PTI.
While the number of sellers would reduce, such stringent actions will ensure "better ecosystem" for the consumers, he had said.
Regarding the feasibility of businesses providing freebies, Paytm's Sharma had said that the cashback model was sustainable.
In June last year, Paytm Mall had received the final tranche of its $445 million (about Rs 3,000 crore) funding from SoftBank and Alibaba.
In April 2018, Paytm Mall had closed $445 million funding round from SoftBank Investment Holdings and Alibaba.com Singapore E-commerce.
--With agency inputs
Updated Date: Jul 18, 2019 12:49:28 IST