Alibaba backed up digital payments and commerce platform Paytm reported a loss of 372 crore in the revenue till March 2015, compared to a profit of around 5 crore in the year 2014.
A Noida-based company’s entry into the e-commerce business was the reason loss was accounted for, where intense competition with Flipkart, Amazon and Snapdeal has forced paytm to spend huge sums on marketing and customer accession.
Paytm, recorded a revenue of Rs 336 crore in 2014-15, as against Rs 210 crore the year before. The company’s expenses swelled to Rs 697 crore, compared to Rs 200 crore in the previous year. It earns revenue by facilitating payments, via its wallet business and earning commissions through its e-commerce platform, where it aggregates thousands of sellers.
They increase in expenses in 2014-15 was driven by a 12-fold rise in its advertising and marketing expenditure to Rs 403 crore. All major e-commerce companies, including Flipkart, Amazon and Snapdeal, are loosing heavily year after year. The three biggies together accounted for losses of over Rs 5,000 crore in 2014- 15.
Paytm closed 2015 with an annual gross merchandise value, or GMV, of $3 billion. GMV is the value of goods sold on a platform, and in Paytm’s case, also includes revenue. As reported on January 23, Paytm’s core payments business made operational profits at the end of 2015. But its e-commerce business loses over $20 million a month, primarily because of the discounts it offers on products.