Sunset of Anyone-Can-Sell-Anything Marketplaces

Paytm Mall marketplace, the e-commerce arm of Paytm, and latest entrant into India’s online retail market, has recently removed 85,000 sellers. The move is supposed to increase customer experience by avoiding fraudulent sellers and counterfeit products. Paytm Mall is left with just 30,000 active sellers after this clean up.

Paytm Mall launched in February 2017, and is going after Amazon India, Flipkart, and Snapdeal in a market which we think is one of the most exciting to watch. Amazon India is leading the market with 200,000 marketplace sellers, so Paytm took a step back in hopes for a better future.

“There are no faceless names, no ABC whom no one knows, no sellers who do hanky-panky,” said Amit Sinha, COO of Paytm, after the change.

The “faceless names” sellers is exactly what Amazon marketplace consists of. Just like Paytm though, Amazon has over time started to require more proof for selling ability, especially for selling major brands’ products. Yet from the customer point of view it is still a marketplace full of sellers like “ABC whom no one knows”, which we wrote about before in Verified Sellers - the Future of Amazon Marketplace?.

Amazon.com receives over 2 billion visits every month, so the process where anyone can join the platform, and start selling products in front of so many people without any checks in place is not going to last. Amazon has been slow to make changes, but it is getting stricter. It is also continuing to put Fulfillment by Amazon (FBA) offering sellers first, since sellers doing their own fulfillment are riskier for Amazon (without long selling history).

The newly introduced Paytm process requires sellers to provide brand authorization letters, business registration number, shop location and photos, and the GSTIN number (Goods and Service Tax Identification Number). All of this information is part of a strict quality check. Walmart marketplace approach of requiring sellers to apply first is now Paytm’s process too.

As Vijay Shekhar Sharma, CEO of Paytm, shared on Facebook:

“From (being an) open marketplace for any seller to now, only reputed and brand-authorised sellers. No more, bad shopping experience due to a few sellers. Now, only highly reputed and brand authorised retailers can sell on Paytm Mall.”

This is exactly the change we’ve been vocal about for a while - anyone-can-sell-anything marketplaces are not good enough anymore. The global counterfeit market size is $461 billion, and the interest from scammers and fraudulent sellers is growing. To retain customer experience marketplaces have no choice, but to vet sellers.

On the one hand marketplaces want to grow sellers and catalog to showcase growth, but on the other hand this need to happen slow enough to retain quality.

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Juozas "Joe" Kaziukėnas

Founder of Marketplace Pulse, Joe wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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