Paytm Ecommerce Pvt Ltd, the latest entrant into India’s online retailing market, is taking a hard line with suspect merchants to avoid backer Alibaba Group Holding Ltd’s (阿里巴巴) reputation as a haven for counterfeits.
In one fell swoop, Paytm Mall delisted 85,000 sellers, leaving just 30,000 on its platform. The move is designed to build trust with customers from the very start.
“It is a drastic measure, but we need to do that to create the right kind of e-commerce platform,” said Amit Sinha, the newly appointed chief operating officer of the Indian company, which received US$200 million in a funding round led by Alibaba.
“We wanted to clean up our house and reset Paytm Mall on the trust count,” he said by telephone.
Alibaba, China’s biggest e-commerce operator, has struggled to shake a reputation that last year saw it return to the notorious markets list published by the Office of the US Trade Representative.
Paytm has made it mandatory for merchants to furnish brand authorization letters as it takes on entrenched rivals, from international giant Amazon.com Inc to homegrown start-up Flipkart Online Services Pvt Ltd.
Amazon has more than 200,000 sellers on its platform and Flipkart about half that. While both are known to delist dubious sellers, neither has come close to Paytm’s cropping in scale.
The three companies are competing for a slice of an Indian online retail industry projected by Forrester Research Inc to grow at a compound annual rate of 31 percent through 2021 to reach US$64 billion.
While not as widespread as in China, counterfeits still present a problem for Indian e-commerce.
Fake Swarovski jewelry, Lacoste SA shirts, Apple Inc iPhones, Montblanc International GmbH pens and Harman International Industries Inc Bluetooth speakers are plentiful, often selling at dirt-cheap prices.
The country does have a legal framework to protect trademarks, but the processes are cumbersome and consumer protection laws do not cover e-commerce effectively.
“Online commerce offers even a small seller of fakes a national footprint instantly,” New Delhi-based retail consultancy Third Eyesight CEO Devangshu Dutta said.
Any e-commerce company that does not vet its merchants is risking selling fakes, stolen and damaged goods, he said.
Paytm said it has authenticated all of its current sellers, even the smallest ones.
Among those jettisoned are hundreds of smartphone merchants with no authorization from the brands they are selling, along with purveyors of branded cameras, laptops, eyewear and watches.
One of the most commonly faked items is perfume, with fakes actively driving customers to brick-and-mortar outlets to avoid being duped.
Sellers are to undergo audits for their business registration, shop location and photographs, as well as goods and services tax number.
Despite the drastic drop in sellers on its Web site, Sinha said Paytm will still have millions of product lines and would add 3,000 agents to scour smaller Indian cities to digitize catalogs of neighborhood shops and brand-authorized stores.
“There are no faceless names, no ABC whom no one knows, no sellers who do hanky-panky,” Sinha said. “We’ve had sellers working out of a warehouse, and then one fine day, when we want to take action, the sellers have vanished.”
Paytm was earlier this year spun off from parent One97 Communications and soon after raised the new funds with backing from Alibaba.
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