A quick glance at various digital lending models

•        Over 90% of households in India have access to banking services and digital lending may increase 10-15 times to arrive at INR 6-7 Lakh crore. Let’s have a look at various digital lending models in India:

 

•        P2P lending: Digital platforms that connects the borrows with the lenders offering an often-quick turnaround time for low-cost loans.

 

•        Crowdfunding: Platforms that allow the investees to raise credit from an open group of investors by simply letting the investees to present their business case and attract investments.

•      PoS Lending: Financing of online purchases by making use of conventional data like bank statements and unconventional data like transaction history.

•         Supply Chain Financing: In partnership with NBFCs, targeting merchants using online medium for selling their goods and services by leveraging the merchant data.

 

•        Invoice financing: To fulfil the short-term liquidity requirements, working capital credit is offered to the MSMEs, based on their unpaid customer invoices.

 

•        Pay later loans: Digital credit like that of a credit card in which small loans are offered with an option to make the payment later.

 

•        Mobile lending: Loans given via smartphones to the customers by analysing the creditworthiness using data values including call patterns, e-money usage, etc.

 

•        Digital Mortgage: Mortgage purchases via a digital channel of the traditional mortgage loan process, comparatively reducing the overall turnaround time.

What is IKEA’s Success Mantra ?

• ·       Everyone needs furniture and IKEA found a way to produce this stuff in a way that's affordable to customers and can be scaled globally.
• ·       Flat pack furniture ships with great efficiency and its cost to produce relative to real wood is much lower.
• ·       The trade-off, is that the customer must assemble it somehow, which they enjoy. And people trade convenience for affordability all the time.
• ·       They're also combining affordability with pleasing design. Cheap and nice is rare and this creates excitement and enthusiasm, which drives sales.

• ·       Their ads are unconventional, they frequently feature people from LGBTQ community and it appeals to them.
• ·       IKEA is an elaborate combination of shell corporations, non-profits, licensees, licensors and other clever dodges to escape taxations.
• ·       Except for little things like foodstuffs, they design the products, manufacture most of them, handle distribution and do the retail, a classic example of vertical integration.
• ·       They keep the bulk of their margins, and don’t split the pie with different brands or distributors, like other distributors and retailers.

Softbank's Dilemma

Has SoftBank’s good days gone?

                     

•        The most sought after VC firm among the startups isn’t having a great time as of now.

•        In the beginning of this year the firm had an operating loss exceeding $13 billion and Alibaba founder Jack Ma left the firm.

•        Half of its assets are invested in 7 companies including OYO, Uber, DiDi which are worst affected by the pandemic.

•        Uber recently fired 3700 employees which shows the gravity of situation.

•        SoftBank expected the fund's top 7 positions to increase in value to $130B over 10 yrs, but things didn’t go as they had planned.

•        The group said it would sell $41B in assets to buy back stock & reduce debt. It has spent $2.3B in the past 2 months buying back its own share.

•        It is also in talks to sell a majority of its stake in T-mobile to Deutsche Telekom AG. It is trying the best to raise liquidity.

•        It will further raise $11.7B using Alibaba Group stock to fund buybacks of its own shares.

•        Do you think Masayoshi Son will bounce back considering his track record?

How “Asian Paints” Challenges the Conventional Thinking

• Formed by four friends in 1942, has a history longer than Modern India.

• By the start of new millennium, the Indian public had changed with more money and less time.

• Customers might think little about paint but they placed a high value on the effect paint brought to their homes.

• Ads with the tagline ‘Har ghar kuch kehta hai’ signified the change.

• A new helpline was launched which brought the public closer to the brand.

• Introduction of a ‘Home Solutions’ service completed the company’s move to a premium brand.

• Buyers of Asian Paints’ premium products swap money for solutions, not just paint.

• Asian Paints raised staff salaries and is going ahead with annual increments to boost their morale amid the coronavirus pandemic.

• There has been no layoff and share prices of Asian Paints gained over 2% to ₹1,554 on May 15 after the announcement despite the poor performance of market in general.

How Coca-Cola Adapts to a Changing Market Environment

• 5th most valuable brand in the world generated more than $31 billion in 200+ territories.

• Lost about a third of its revenue due to high sugar content in its fizzy drinks and increasing health awareness.

• In the first quarter of 2019, its revenue increased 5.2% compared to its previous first quarter results.

• How did Coca-Cola do this and came back on the track?

• In 2018, Coca-Cola bought Costa Coffee, a coffee chain popular in UK and increasingly in China. It even has stores in selected metros of India.

• The company now owns a number of Tea, Water and Juice brands which are healthier and can also charge premium.

• Big Brands survive by continuously adapting to the changes in their environments.

GIPHY: The search engine of GIFs

• GIPHY is an American online database and search engine that allows users to search for and share short looping videos with no sound, that resemble animated GIF files.

                                   

• It was founded in Feb 2013 and idea for the business came when the cofounders were having breakfast, musing on the rising trend of purely visual communication.

• It had 250 million+ monthly active users by July,2017 which increased to 700 million+ daily users today.

• Giphy has partnered with over 200 companies and brands to host all their existing content on their own branded channel. Giphy's partners include Disney, Calvin Klein, GE, and Pepsi.

• On 15th May FACEBOOK acquired GIPHY for $400 million and many Giphy users talked about deleting the app due to privacy reasons.

• This deal is very important for FACEBOOK since they’ll have access to user’s data and how GIFs are used across 1000s of apps.

• Do you think this deal was fair for GIPHY and they’ll still be user’s first choice?

How Square makes Money

• Square is a financial services and mobile payments company that sells a
broad range of products, including point-of-sale hardware and software.

• Square's primary products are: a point-of-sale hardware system;
software for payments processing and analytics; Square Card, a free
business debit card; and Cash App, a peer-to-peer (P2P) payment service
and Bitcoin sales.

• Square faces a broad array of small and large competitors such as
business software companies, payroll processors, payment terminal
vendors, and banks.

• Four years after going public in 2015, Square posted its first annual profit
in FY 2019, reporting $375.5 million in net income compared to a $38.5
million loss a year earlier. Those profits were fueled by soaring net
revenue, up 42.9% year-over-year (YOY) to $4.7 billion.

• Bitcoin was Square's fastest-growing category and made up 11.0% of
Square's revenue in 2019 and Bitcoin revenue soared 210.2% to $516.5
million.

• In FY 2019, Square generated $1.0 billion in subscription and service
based revenue, up 74.3% YOY and it accounted for nearly 22% of the
annual revenue.

• In FY 2019, transaction fees accounted for $3.1 billion in revenue, up
24.7% YOY. Although transaction-based revenue was one of its slowest
growing categories, it represented by far the largest share of net
revenue, about 65%.

• On March 24, Square lowered its guidance for Q1 growth in revenue and
gross profit due the coronavirus pandemic and revised its net revenue
and gross profit expectations to between $1.30 and $1.34 billion and
between $515 to $525 million, respectively.

KC
(signing off....)