Warren Buffet recently made a strong pitch in favor of capitalism. This is a great motivation for many budding entrepreneurs. Though along the lines of pitching for capitalism, Buffett also mentioned that new age capitalism is quite different than what it used to be in the earlier decades.
What is New Age Capitalism?
New age capitalism refers to the e-commerce and digital startups that are coming up in huge numbers, these days. The two majorly observed characteristics of these new-age companies are
- They have an asset-light model. They do not believe in creating assets, rather they focus on leveraging existing business by enabling them with newer opportunities.
- The definition of what Investors called it as Economic Moat has changed. Previously economic moat meant strengthening business in a way that would reflect in the bottom line of the company. If you look at these new-age companies, most of them do not make any profits. Their target is to acquire as many customers as possible and enhance the overall enterprise value.
Continue reading Porter’s 5 forces in the New Age Economy
Payments space has undergone some rapid changes in the recent past. As per a report published by mobile payments, digital payments are expected to grow at a healthy rate of 17.6%. With such strong growth, expect a surge in innovation by players to capture a sizable market share.
A brief History of Payments
Payments space has evolved over the years. Payment mechanism came in to existence with Barter system. The first actual money transaction happened with coins somewhere in the 10th century. Exchange of gold for product and services came into existence in 13th century. Western Union in 19th century introduced money transfer system. Credit cards are just about to complete a century of their existence in 2020. These credit cards introduced earlier as metal money, are now known as plastic money. Since the 1920s we have seen payment space evolve in bits and pieces with small and frequent innovations introduced in the market. Visa and MasterCard became the pioneers of the payment systems with their consortium. Their focus on innovation revolved around cards and payment processing entities.
Continue reading Digital Payments – Technology enriching Finance
Global e-Commerce markets have touched $3.46 Trillion online in 2019, up from $2.93 Trillion from 2018, as per a forecast published by Digital Commerce 360. This global scenario certainly looks promising, with a rosy picture being portrayed about its future prospects. Yet when you look at individual organizations, there are only a handful of organizations that are making money. If you look from the Indian context, it stood at $39 Billion in 2017 and is expected to grow at a rate of 51 percent, to $120 Billion, as per a report from IBEF.
With so much upside potential for growth, it is obvious to expect a heavy inflow of investments. As of 2019, if you look up for a profitable eCommerce venture, you will hardly find any. Despite so much potential and growth, not a single eCommerce company in India has been able to form a sustainable profit venture. In fact, even in 2019, both Amazon and Flipkart made losses to the tunes of thousands of crores. An obvious first thought here is, have these large corporations planned out their business model before investing heavily? These MNCs would certainly have made some definite plans for the break-even point. With this idea, let’s look at some of the methods eCommerce companies make money from and are these methods good enough.
Continue reading Is the eCommerce future oversold in India?