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Paytm plans aggressive expansion of online travel business to drive more traffic to portal

 
 

Richa Maheshwari, The Economic Times

Bengaluru, 15 April 2016

Paytm plans an aggressive expansion of its online travel business by branching out into rail, road, airline and tour bookings in order to drive more traffic to its portal that is largely payments driven.

The company has partnered services marketplace Ezeego1 for hotels and flight bookings and is also in talks with several airlines. The online player is also integrating the rail inventory of Indian Railway Catering and Tourism Corporation on its platform.

"It is becoming increasingly challenging for vertical players to drive traffic. Whereas, horizontal players like Paytm have been fairly successful in driving loads of it," said Abhishek Rajan, head of travel marketplace, Paytm. The company is planning to invest around Rs 120 crore on its travel marketplace in the current financial year.

A horizontal player in the ecommerce space offers multiple shopping categories such as books, apparel, appliances and more on a single platform whereas, a vertical player specialises in one kind of offering.

Paytm will earn a commission for each booking made through its platform. The company launched its travel marketplace last year and has restricted to book buses and hotels. It aims to roll out adventure tours, inter-city cabs and overseas travel requirements such as visa application and money conversion by the end of this year.

As per a recent Morgan Stanley report, categories like payments, travel and taxis saw an increase in total fundraising from 12% in 2014 to 44% in 2015.

Last month, rival Snapdeal had integrated bus, flights and food delivery bookings on the platform to drive up its gross merchandise value. "Horizontals are looking at monetising their user base with a focus on GMV and repeat use cases. As the funding environment becomes tougher, growth in these metrics will stand out," said an investor in of the top three ecommerce companies.

Paytm, however, is building a marketplace taking a cue from Alitrip, the travel marketplace run by its investor Alibaba in China. "Our intention is to continuously add new travel categories to the platform and drive organic growth without making large marketing investments," added Rajan.

According to experts, the strategy can ring in higher margins, too. "These services won't take up any extra cost in terms of physical space and there is no delivery cost too. Hence, these players will make better margin out of it while providing something new to consumers," said Devangshu Dutta, CEO at retail consultancy firm Third Eyesight.

A report from the Internet and Mobile Association says that the total value of digital commerce stood at Rs 81,525 crore in 2014, of which Rs 50,050 crore, or over 60%, was accounted for by the online travel segment.

(Published in The Economic Times)

 
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