Paytm launches subscription service to take on Amazon, Flipkart

BENGALURU: Taking on popular subscription programmes of Amazon (Prime) and Flipkart, mobile payments major Paytm is set to start its own subscription programme — Paytm First — as it looks to catch up with rivals. The Ant Financial and Softbank-backed company is looking to on-board about 3 million subscribers in the first year, investing about Rs 250 crore in this line of business hoping it would cut its user attrition rate by at least 50%. 

Paytm First is looking at a mix of exclusive incentives for consumers, both within its ecosystem of products like payments, movies and travel besides external partners like Zomato, Gaana and Uber. 

At this stage, the Noida-based company has priced the annual subscription at Rs 750. Amazon's annual subscription is priced at Rs 999 while Flipkart's loyalty programme Plus is not a paid service, where consumers earn digital coins on every purchase which they can redeem on subsequent transactions on Flipkart. 

“We will aggressively market this subscription product. We have already seen merchants joining us with as much as 80% discount on pricing of their products and services to be part of Paytm First,” said Deepak Abbot, SVP, Paytm. The company is said to have over 50 million monthly active users, one of the highest among top-internet companies. Abbot declined to give specific details on these metrics. 

As per a note by Barclays last year, Amazon has about 7 million paid Prime subscribers in India. Amazon had launched Prime here in 2016 at Rs 499 per year as inaugural offer to on-board users. 

According to industry executives, subscription programmes like Prime are to retain the premium layer of consumers so that they keep spending on these platforms. Out of the 80 million annual active users who transact online, about 20-30 million are the most-valued by these companies. For instance, out of every three product sold on Amazon India, one is bought by a Prime subscriber. 

"This is for consumer retention, clearly. This could give Paytm the advantage against rising competition in the core payments play from PhonePe, Google. While Amazon is a preferred shopping destination, it remains to be seen how this will play out for a player like Paytm. Subscription products that are simple and easy to use will see good adoption," said Satish Meena, senior forecast analyst, Forrester — a market research firm.