Amazon, Walmart Will Help Save India’s Banks

Amazon, Walmart Will Help Save India’s Banks Amazon.com Inc. and Walmart Inc.’s Flipkart Online Services Pvt claimed record sales during the recently concluded six-day online shopping bonanza that marks the start of the Indian festival season. Although nowhere close to Alibaba Group Holding Ltd.’s $31 billion Singles’ Day promotion in China, the Indian version of Black Friday has grown fivefold to $3 billion in four years, according to a review of this year’s sales by RedSeer, a consulting firm. Add the spending between now and Diwali, the Hindu festival of lights, and Forrester Research reckons the total for a month of online purchases may fall just shy of $5 billion. Although the 30% growth this year was slower than in the previous three, it’s a strong outcome in a weak economy. Both of India’s leading e-commerce marketplaces cited small towns – and credit – for their success. Flipkart says Tier 3 cities ordered 100% more goods this year. The share of transactions using credit options grew by 70%, with a majority of these people living outside of big cities. Amazon revealed that three out of four customers who availed themselves of financing came from Tier 2 and 3 cities; significantly, every second buyer who used credit did so for the first time. All this is hardly unique to India. China’s e-commerce boom saw an explosion of microloans, with millennials buying hamburgers on credit and the buy-now-pay-later habit picking up in Indonesia. What makes India interesting is the possibility that soon even physical retail will embrace digital in-store credit – minus plastic. A mobile-payment app with pay-later options at physical stores will be an important innovation. For all its expansion, e-commerce will account for only 7% of India’s $1.2 trillion retail sales by 2021, according to Deloitte. Credit cards won’t go beyond big cities and organized retail. It’s not worth any bank’s while to make card acceptance universal because the revenue to a bank from signing up a mom-and-pop shop – the merchant who handles purchases at the bottom of the income pyramid – is a meager $4 a month. That’s why Flipkart’s “cardless” credit deserves attention. Customers are validated for a $1,400 limit via a simple video upload; the actual financing comes not from Flipkart but from banks and financiers like Bajaj Finserv Ltd. This is the model that Mukesh Ambani, India’s richest man, might use to connect India’s 30 million small retailers with consumers. Amazon’s claim that its Great Indian Festival saw orders from 99.4% of the country’s postal codes owes that reach to Ambani’s aggressive entry into telecoms three years ago. The 4G network of Reliance Jio Infocomm Ltd. has caused data prices to crash and usage to explode. But Ambani won’t let the American duo of Amazon and Walmart be the biggest beneficiaries of his disruption. If Jio succeeds in taking its knowledge of 340 million Indians who use its mobile service to neighborhood stores, where most people still shop, banks and shadow banks will rush in with credit. From Citigroup Inc. to State Bank of India, HDFC Bank Ltd. to Singapore’s DBS Group Holdings Ltd., everyone will want this sizable new line of revenue at the intersection of consumer and corporate banking. Writing in the Financial Times, Viral Acharya, a former deputy governor at the Indian central bank, argues that finance in India must learn from shampoo makers such as Unilever and Procter & Gamble Co., who boosted sales by offering families affordable quantities in small sachets rather than in more expensive full-size bottles. To similarly make bite-sized finance sustainable, account aggregators are coming. They’ll digitally record a consumer’s transactions with various institutions and, with consent, share data with a lender. Given that 52% of Indian workers are self-employed, and only 23% earn a regular wage, to be able to accurately assess a borrower’s irregular cash flows will give lenders confidence to extend credit. So large is the overhang of bad corporate debt that to suggest a better model of banking will emerge invites skepticism. Yet below the surface of corporate bankruptcies and failing financial institutions, technology is enabling important change. Maybe not tomorrow, but credit will go where it is due. To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.net To contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.net This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News. Harvard Comes to India - An Opportunity for Entrepreneurs? Online programmes offered by foreign universities are becoming popular but need local support October 9, 2019 4 min read Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. If you are a working professional, chances are you would have seen advertisements for a Harvard University programme in your LinkedIn or Facebook feed. Click on the advertisement and you will find an opportunity to proudly don the crimson crest, right here in India, by enrolling in one of their many paid online programmes. Harvard is not alone. INSEAD, Columbia University, Tuck School of Business and many others are following pursuit. Have the Ivy Leagues finally decided to open their doors to the millions of aspiring professionals in India? And more importantly, does this create opportunities for entrepreneurs? Let’s find out. Old Wine in a New, Bigger Bottle Many foreign institutions have been present in India for years but perhaps not in the conventional sense. In the early 2000s, a number of top-tier foreign universities started offering bespoke executive education programmes targeted at corporates and senior management. These programmes flourished along with the economy and despite their hefty price tags, the lure of a prestigious brand has kept them going. The online programmes we see now are essentially offered by the same executive education departments but come with more ‘mas’ appeal. Predominantly aimed at today’s upwardly mobile working professionals, these can be two-three week courses on business basics to specialized 10-12 week certificates in analytics. And while such programmes may burn a $2,000-3,000 hole in your pocket, the hook is simple—a glittering brand on your resume from the comfort of your home. The Packaging is of Strategic Importance Apart from the obvious advantage of easily accessing large student pools, these online programmes are of strategic importance to foreign institutions. Firstly, being less than 12 months long, they are outside the purview of the government regulator. India’s complex education regulations have long prevented foreign universities from offering degrees in India. In sharp contrast, Kellogg School of Management, Yale University, INSEAD and Cornell University, among others, are operating over 1,000 programmes in Asia with India being the major exception. Secondly, being fully online, providers don’t have to fly down their celebrity academics. Not only does that reduce administrative headaches it actually makes these programmes extremely profitable to offer. Lastly, these programmes are a good hedge against a cooling economy. As corporate purse-strings tighten, so does spending on lavish ‘perks’, such as the aforementioned executive programmes. During such times, individuals seek to upskill and improve their chances of finding a better job (or saving the one they have!). And what's better to make you stand out than a specialist certificate from a global brand? They Need Local Entrepreneurs to Sell Their Wine The biggest pain point for foreign institutions is getting students to enroll. After all, a $3,000-programme is not a DIY online purchase in a market like India. You need marketing, enrolment advisers and accompanying local infrastructure. And that is where the opportunity lies. A few Indian start-ups have entered into distribution and management agreements with these brands in return for a royalty fees. But it's only the tip of the iceberg. The number of foreign brands seeking India, variety of programmes and support services needed are all expanding. And it’s not just universities. Some of the most prestigious K-12 schools are already eyeing the Indian market. The opportunity is there for willing and credible entrepreneurs. So What’s the Catch? For starters, a foreign programme can be quite expensive for an average India. That puts pressure on customer acquisition costs and requires strong marketing capability. The current state of the Indian partners suggests break-even is not that easy. Many of the foreign brands don’t enter into exclusive contracts and take a long time to sign-on. Having credible links into the old boys club at these institutions goes a long way. Importantly, the value of the programmes needs to be proven by driving acceptability among employers. Providers must ascertain learning for students, especially if the programme is fully online. Harvard is not just here, it's more than that. Foreign brands are creating opportunities for entrepreneurs to build great businesses. The education sector has never been more in need of innovative and resourceful entrepreneurs than today. Xiaomi Announces New Redmi 8 In India, Also Announces Plan For New Redmi Note 8 Pro Just two weeks after the launch of Redmi 8A in India, Xiaomi has launched another smartphone in the country. The Chinese hardware maker has announced its new Redmi 8 at the company’s official launch event. The new phone boasts a glass body with the Chinese firm’s new Aura mirror design. It offers similar specs with the previous Xiaomi handset, the Redmi 8A. The only big difference between the two smartphones is the tweaked rear design, the second camera, and the new fingerprint sensor technology. Features and strengths of the new smartphone model The new Redmi 8 features a 6.22-inch Dot Notch display with Gorilla Glass 5. Like the others Xiaomi phones, this new handset also gets a P2i coating for splash resistance and a new AI scene detection system with 33 profiles ranging from plants, pets, scenery, and 6 India specific modes. Representational image of a Xiaomi Redmi phone. Photo: Xiaomi The new phone brings a 12 megapixel + 2 megapixel AI dual camera setup and an extra second camera. The phone’s 12-megapixel camera is equipped with the sophisticated Sony IMX363 sensor, which was teased previously by Xiaomi. This was the same sensor technology used in Google Pixel 3a, Mi 8 and Mi Mix 3. The rear camera comes with Google Lens integration, which the Chinese firm said will allow users to live translate between 104 languages by just pointing the camera at text. Powering this new handset is the same octa-core used in Redmi 7A, the Snapdragon 439 processor. The mobile processor is paired with the Adreno 505 GPU. The new mobile device boasts two RAM/storage options; the first one is a 4GB RAM option with up to 64GB of storage and the second one is the 3GB variant with 32GB of storage. As for the battery power, there's a 5000mAh cell that can support up to 18W fast-charging. However, users will get only a 10W adapter in the box and they need to buy the fast charger separately. For the connectivity, the Redmi 8 brings a USB-C port, a dual SIM slot, a wireless FM radio, a dedicated MicroSD slot, and a rear fingerprint scanner. General availability and release date The Redmi 8 comes in three colors: the Ruby Red, Sapphire Blue, and Onyx Black. Prices start at Rs 7,999 (~$112) for the Redmi 8 3GB/32GB variant and Rs 8,999 ($126.76) for the Redmi 8 4GB/64GB variant. As part of the handset’s marketing promotion, Xiaomi has also announced a special offer for the first 5 million units sold. During that special offer period, the 4GB variant of the Redmi 8 will sell at Rs 7,999 ($112.68). As for the general availability and release date, the Redmi 8 will be made available on India on October 12 on Mi.com and Flipkart. The Redmi 8 will also be made available in Ukraine for $181 for the 4GB variant. In addition to the new Redmi 8 smartphone, Xiaomi also made some surprise announcement during the official launch event. The Chinese manufacturer said that it's planning to launch the Redmi Note 8 Pro in India. This 64 Megapixel camera phone will be officially launched on October 16.