San Jose headquartered online shopping giant eBay has staged a comeback in India’s burgeoning e-commerce market by picking up 5.5% stake in Paytm Mall. This will be eBay’s second inning in India after selling minority stake in Flipkart few years back to end its maiden Indian journey on an ignominious note. Notably, this minority stake was secured as part of the swap deal with Flipkart acquiring majority stake in eBay India.
Paytm Mall and eBay have refused to reveal the financial details of the deal but people privy to the matter claim that the deal is estimated to be around $150 Mn. As part of the deal, eBay will make its global inventories available to the active users of Paytm Mall as well as Paytm app ecosystem. It will also get an observer seat in the company’s board.
eBay’s investment will offer Paytm Mall a sigh of relief with the latter struggling to raise fresh funds in the wake of its declining market share. According to reports, the Gurgaon based company held paltry 3% market share in India’s e-commerce market by the end of 2018. This is ceratinly abysmal when compared with dominant 31% market share held by Flipkart and Amazon each during the same period.
With rapidly receding market share, Paytm Mall’s two biggest investors Alibaba and SoftBank have refused to infuse anymore fresh capital. The company also recently pulled the plug on its pan India e-commerce shipping business in order to cut the operational cost.
eBay, on other hand, will hope that its second inning in India’s ecommerce market turns out to be a profitable one. However, the ignominious end to its first inning cannot hide the glaring fact that it failed to leverage the first mover advantage in India’s e-commerce market. eBay started Indian operation much before the entry of e-commerce’s eventual poster boys Flipkart and Snapdeal.
