Alibaba-backed Indian e-commerce firm Paytm Mall seems to be losing steam faster than expected even as the company plans to change its business model.

According to sources, the company has been scaling down its B2C (business to consumer) business, shutting down the fulfilment centres and has almost stopped giving cashbacks.

This has also resulted in a massive drop in traffic to the Paytm Mall’s website. According to SimilarWeb, a New York-based website that provides web analytics for businesses, the traffic to Paytm Mall has come down to 5 million per month in January 2019, a whopping 88 per cent decline from 45 million visitors a month in October last year.

According to sources, problems started for Paytm Mall in October last year after the company, following a series of board meetings, came to the conclusion that the B2C model was not sustainable, and it needs to scale down the business slowly and switch to a B2B model with an online to offline (O2O) strategy. The company’s focus on the strategy seems to be a constant as it had acquired two hyperlocal deal marketplaces — Little and Nearbuy back in 2017 — to strengthen its presence in the O2O space.

Move hits sellers

However, the scaling down of the B2C business has hit several Paytm Mall sellers, who are now stuck with inventory. “They (Paytm) asked us to stock a month’s inventory for December last year and now asking us to take back the inventory. They have shut the fulfilment centres at several places. We can’t return these unsold inventory back to the manufacturers now,” said a Mumbai-based FMCG seller. BusinessLine spoke with over dozen sellers across categories and each one of them cited the same issue.

A back-of-the-envelope calculation shows that the sellers are stuck with inventory worth ₹150-160 crore.

“Paytm stopped giving cashbacks and this has resulted in heavy losses for us as consumers have stopped buying. I was doing business worth ₹10 crore a month, but now it has come down to ₹10 lakh. They stopped cashbacks without even informing us,” another seller said.

A Delhi-based seller said: “This is the last of the leftover stocks parked at the fulfilment centres and no seller has sent any inventory in the last two months. The unsold inventory now becomes our responsibility.”

Paytm Mall, which was started in 2017, raised more than ₹2,900 crore in funding last year and has been incurring huge losses. As per its filings with the Registrar of Companies sourced from Tofler, Paytm E-commerce Private Ltd reported a 100 per cent growth in its revenues for FY18 at ₹775 crore. During the fiscal, the company’s losses grew a whopping 150 times to ₹1,800 crore.

Founder denies charge

Vijay Shekhar Sharma, founder of Paytm, has rubbished all the allegations. “I have mentioned earlier also that we (Paytm Mall) will have a majority business by O2O category. Grocery from our store is becoming bigger and bigger,” Sharma told BusinessLine . He further claimed that the company’s GMV (gross merchandise value) has grown and that the company is pushing the inventory of offline stores nearer to customers for faster delivery.

Experts attribute the restructuring at Paytm Mall to the cut-throat competition in the e-commerce market where Flipkart and Amazon have clearly established their dominance.

They feel that Paytm seems to be losing its identity by getting into many businesses — from payments to banks to mutual funds to e-commerce.