Paytm to flood India with 100 mn Chinese products, with Alibaba's funding

With funding from Chinese e-commerce giant Alibaba, the Paytm app will give its customers access to 100 million cheap Chinese products that are sold at prices starting from as low as Rs3.

These products, sourced from Chinese companies such as Tao Bao, TMall and Ali Express, are part of Alibaba ecosystem, says a report in The Economic Times.

One97 Communications, the parent company of Indian mobile payment and commerce platform Paytm, has received funding to the tune of $900 million (about Rs6,000 crore) from the Chinese giant and is planning to expand its e-commerce business by investing around $600 million over a period of three years, says the report.

Paytm will be using the funds to integrate Chinese sellers from the Alibaba ecosystem on its mobile application that will offer products at affordable prices, according to the report.

The flood of cheap Chinese products could disrupt the current pricing strategy of Indian e-commerce majors like Flipkart, Amazon and Snapdeal who are already undercutting each other through discounts.

The Noida-based payments and marketplace company also recently launched its travel marketplace and will begin by selling hotel bookings through its app as well as website, the report said.

Paytm's pilot project, which would create a "virtual China bazaar," could further bleed incumbents who would be forced to offer further discounts.

As part of Alibaba's ecosystem of merchants, Tao Bao, TMall and AliExpress are already getting access to the Indian market. They will now be merged with the main Paytm app catalogue.

Since beginning of 2015, Paytm has received $880 million in two tranches from Alibaba Group and its affiliate Ant Financial, for around 40 per cent equity. Alibaba has also invested in rival etailer Snapdeal for a small stake, raising concerns in some circles about conflict of interest.