At a time Amazon and Flipkart are seeing 73% and 40% revenue growth in their respective wholesale businesses, Paytm, too, is looking to get in on the action. Citing regulatory filings, The Economic Times reported that the Vijay Shekhar Sharma company has set up a wholesale entity for its ecommerce business.

Paytm Wholesale Commerce was incorporated in September with a share capital of Rs 20 crore. The shares have been subscribed to Paytm E-Commerce Pvt. Ltd, the entity which runs Paytm Mall. The regulatory filing states that the objective of the company is to "carry on the business of buying, selling, reselling, importing, exporting - of goods and luxury brands on a wholesale and B2B basis".

Amazon India and Flipkart use their wholesale units as distribution channels that source products from brands directly and then supply these to third-party vendors to sell on their online marketplaces. The focus on the wholesale B2B business became more significant following regulatory changes in early 2016 that limited sales from a single vendor to 25% of a digital marketplace's gross sales.

"For an ecommerce company, supplying through a wholesale arm means more control over the quality and supply chain, especially for de-risking categories such as electronics," Sreedhar Prasad, an industry expert on consumer business and ecommerce, previously told the daily.

This development comes at a time Paytm is losing more money in its online retail business, compared with digital payments. It reported a loss of Rs 1,787.55 crore on total revenue of Rs 774.86 crore in the last fiscal. Moreover, Paytm Mall is still a distant third to Amazon and Flipkart, which together hold a market share of over 80%. Since it is difficult for a company to scale up without efficient inventory management, Paytm Mall is likely looking at its new B2B company as a way to compete with the top etailers.

Significantly, according to the filings, Paytm Wholesale Commerce also entails activities as commission agent and distributor for international brand or manufacturers. "This could reflect Alibaba's intent on bringing their goods here, maybe by setting up a seller entity," Satish Meena, senior forecast analyst at Forrester, told the daily. In other words, the new entity could help Paytm tap the Chinese behemoth's massive seller base to buy products in bulk and at cheaper prices.

(Edited by Sushmita)