Cashback in Paytm Mall raises eyebrow by the investors
The design of paytm mall has orchestrated in a such a way ,it could be easily handled by the junior to the mid-level with a third-party vendors by creating fake orders, where it has involved a certain set of vendors and customer profiles, to turn around the cashback offers.For this one has to better understand on how to play with the cash.
It has penciled by EY, cashback fraud has happened at Paytm MallPaytm Mall, has roped in consulting and audit major Ernst & Young (EY) to investigate a cashback fraud involving its staff who created a fake list of vendors, orders and customers to siphon off funds.
Paytm Mall,is backed by Chinese e-commerce giant Alibaba and Japanese investment firm SoftBank, said it’s working with EY “to build a technology-driven fraud prevention system”. The report also says,apart from the administration, finance and other support functions, the company also has a business operations team which works closely with partnered merchants to plan and execute cashback offers & promotions, leaving scope for collusion. The EY partnership will also undertake audit & fraud prevention using both human and artificial intelligence.
Bhushan Patil, president, Paytm has also quit where he had joined in 2016 to look after its cross border commerce business. Patil is an IIT Bombay alumnus, had previously served as a director, Alibaba, leading its new Global Markets initiatives for over five years.Experts says, all disruption techniques never succeeds, because it has designed on the methodologies of speculations.The fact is when the user feels that, it has designed on the temporary basics to attract the users, after gaining the market share they are going to change their own commercial style of doing business.It badly bounces back. It is just like law of nature.
“These orders were of small sizes to make sure it doesn’t catch the eye of the management for the longest possible time. There was a circle of orders, vendors, and consumer profiles that were essentially circling back to each other many times. Even after losing some money for cancelling orders, the cashback in volumes made significant gains,” a person mentioned above said. This, according to him, would not have been possible without the assistance from vendors who would have to technically process the orders on Paytm Mall.
In the year ending March 2018, Paytm Mall reported close to Rs 1,800 crore in losses by fighting with Amazon and Flipkart, Paytm was aggressively offering cashbacks on each order to lure consumers to shop on its platform. The details of the nature of the cashback scam are being reported for the first time. The platform continues to de-list fraud merchants and take strict action wherever needed,” Paytm said.
Another subject matter expert says, methods adopted by the internet and e-commerce companies over the past few years as people try to circumvent policies to make a quick bucket shows in the book but actually they are burning the cash, in a good faith that the customer who has got the discount, he will stick to us in the longer terms, but it never happens.Once you stop offering the discount, he'll switch over to other opportunities.
Now, the Paytm Mall is under severe pressure from its rivals and undergoing a change in strategy completely to online-to-offline (O2O) as parent firm Paytm is working on raising new capital for both the payments and e-commerce entity, which seems very tough deal.