Grocery to be next gateway for Paytm

Alibaba-backed payment platform Paytm is set to enter the online grocery market under a new business vertical to be headquartered in Bengaluru. The development, at a time when domestic e-commerce giant Flipkart is also preparing to start grocery retailing, a space currently dominated by small and mid-sized players, suggests investors and analysts are viewing grocery as the next big growth avenue in e-commerce.

Through affiliate Ant Financial Services, Chinese e-commerce giant Alibaba is infusing USD575 million in Paytm, whose wallet user base recently touched 50 million. Paytm is going to use part of the fresh funding for its foray into the new business of grocery retailing.

Paytm’s grocery segment, initially with a team of about 20, is likely to begin operations soon. Online grocery is expected to help boost its transaction rates and customer acquisition, both important benchmarks for investors at the time of valuing a company for fresh funding.