[CASE STUDY]- Paytm has proven to be the smartest online travel player

30/03/2017
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Paytm founded by Vijay Shekhar Sharma in 2010 under the company name ‘One97 communication’ started its journey as an online recharge platform and in 2014, it has transformed into one of the largest e-commerce marketplaces.

In 2015 it moved into travel booking segment. Recently, Alibaba has bought 25% stake in One97 communication.

Paytm has said that its annualized GMV from its travel vertical has crossed $500 million.

 Statistics tell Paytm’s success story

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  • It is India’s biggest transacting website (after IRCTC).
  • It is the India’s fastest growing consumer internet brand.

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Paytm’s foray into Travel marketplace

Paytm is the first e-commerce marketplace to enter into travel operations.

The company has preferred Bengaluru as the base of operation for its travel marketplace.

The company has tied up with several travel aggregators to get almost all bus routes on its system and has achieved 100% growth since its launch in February this year.

“We are encouraged by the positive response to our foray into the travel business, particularly in the train and air ticket segments which were launched only towards the end of 2016. This year we plan to further accelerate our growth and firmly establish ourselves as a dominant player in the online travel market.”

Abhishek Rajan, Vice President, Paytm

With 10+ million travel tickets booked, online payments and e-commerce marketplace Paytm are fast becoming the ideal destination for travellers to plan their trips.

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Paytm now offers the complete range of travel bookings that include air, bus, train tickets and hotel bookings.

The company has emerged as India’s biggest private B2C player in train tickets segment.

“Our biggest strength is the reach we enjoy. Millions of users can come online through us to book a travel ticket. Right now, we have about 200 million users on the Paytm platform. If we look at the total number of consumers buying online travel it may not be more than 30 million. So, that is the gap we want to fill.”

Abhishek Rajan, Vice-president, Paytm.

What Competitors say?

The hostility of Paytm might be a worry for competitor’s officials.

“We want to create a much bigger market, mostly untapped”.

Yatra said it would be able to defend its province.

“Given our loyal base, we are in a relatively secure position irrespective of what happens on the competitive front in the short term. Players like Paytm will also have to figure out which all battles they want to fight. Capital is scarce at the end of the day and at some point one will need to prioritise.”

Dhruv Shringi, Co-founder and CEO, Yatra.

Paytm is up against travel website ‘MakeMyTrip’, which is all set to merge its market-leader position with the acquisition of its closest rival Goibibo for an estimated $1.8-2 billion in October.

Paytm, however, believes that it will soon be closing the gap by selling nearly 1million tickets in October as against MakeMyTrip’s 1.2 million monthly transactions in the July-September quarter.

Future Plans

  • The company plans to start signing up hotels and travel agents on the platform very soon.

With plans to invest around INR 120 crore in its travel marketplace in the current financial year, Abhishek Rajan, Head of Travel Marketplace at Paytm said-

“Our intention is to continuously add new travel categories to the platform and drive organic growth without making large marketing investments.”

  • To team up with bigger brands in order to increase its reach to potential consumers.
  • Alibaba is planning to increase its stake from 25 to 40% with investment of around $600 million.
  • To double its users base by 2020.
  • Paytm is set to invest $15-50 million each in 5 budding start-ups to acquire around 25-40 % stake in them.

Summary

The online travel segment in India was estimated to be worth over $8 billion in 2014 and line up to grow exponentially.

Paytm’s move to go with travel focused marketplace made a lot of sense giving the business a global reach and 60 million plus wallet penetration.

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