The power of a Human Mind is astonishing. Just by looking at the past few inventions, one can understand, what the human mind is capable of. In the present age, everything is possible with just a simple click, from shopping to dating. It wouldnât be wrong to say that we are carrying the whole world in our pockets, thanks to technological advancement. One of the biggest contributors to carrying the world in our pockets is Apple Inc.
The worldâs biggest technology company that deals with electronics and computer software first started its journey in 1976. It was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne.
Till 2011 Steve Jobs was the CEO of the technology giant. Later in that year, after the death of Steve Jobs, Tim Cook took the charge of Apple. These are just basic facts that almost everyone knows about Apple. Letâs come to the point that makes this article interesting.
Regardless of how much money we make, taxes are very painful for all of us. But on the one hand, people like you and me sincerely pay our taxes. On the other side, there are companies like Apple, and Google that evaded their taxes by billions of dollars.
The question is what is this genius tax-evasion strategy and how do they escape the strict laws of governments? Let’s try to understand by using Apple as a case study.
With great powers, comes great responsibility, and so do pay taxes to the government of the country they live in. Apple being the biggest tech company is not an exception. It is bound to pay a large sum of amount to the Government in the form of taxes.
Just like other businesses, Apple is also not that fond of paying billions of bucks in taxes but has no choice but to be responsible to the country. Somehow, Apple used a tactic to avoid paying billions to the Government. Well, the secret is, not so secret. Apple transfers most of its profit to tax haven countries and thus takes advantage of loopholes, the US Government has in its tax-paying system.
âPlay by the rules, but be ferociousââ Phil Knight
As part of its tax avoidance strategy, Apple uses its âsubsidiariesâ in Tax havens. Now, to understand this more deeply, first letâs try with the term, Tax Haven.
True to its name, the term âTax Havenâ is used for all those countries that offer, foreign investors the to pay minimal and sometimes even no taxes for their businesses. This is basically a good scheme for the investors to avoid paying taxes to the actual country the individual or business belongs to. Another attractive part of this âheavenâ is that they occasionally offer financial secrecy to the investors.
Some of the top Tax havens are:
Ireland
Netherlands
Switzerland
Panama
Bermuda
The Cayman Islands
Luxembourg
The Tactics Apple Uses For Tax Avoidance
Every time Apple has stated that it has always played by the rules and has paid taxes to the Government as per the laws. In fact, it considers itself the largest taxpayer in the world. This is somewhat true, in 2017, Apple stated that it had paid over $35 billion dollars in the last three years. However, that amount wasnât able to make even a small dent in the revenue of Cookâs led multinational company. How?
Well, the strategy is to transfer their profit, obtain domestically to Tax Haven countries. Apple uses Ireland and Luxembourg as its âHavenâ to get away from paying the lump sum.
Agreement Between Ireland and Apple
Apple has been operating in Cork, Ireland since 1980 for its overseas operations, and they also set up a manufacturing plant in Holyhill, above Cork.
In 1990, when Apple’s market share was crumpling worldwide, they wanted to save money. Apple’s CEO John Sculley signed a deal with the Irish government. In 1990, Apple’s team met with the Irish government and drafted an arrangement for how much tax it paid in the country.
Since then, Apple has been the largest employer in Cork, Ireland, where they had an upper hand. Apple disclosed to the Irish government that the firm is examining its worldwide operations and Apple desires to establish a profit margin on its Irish operations.
Based on the financial data from 1989, Apple showed $751 million dollars in revenue and $270m in net profit per year. Apple also showed that these profits were made mainly through its technology, marketing, and manufacturing.
They told the Irish government that they only manufacture in Ireland. Therefore, they should not be taxed on the other two elements of business: marketing and technology. Apple has been in Ireland for 10 years and if they do not strike a deal, they will go somewhere else.
Apple’s revenue generated from India, Europe, and the Middle East is taxed in Ireland
The Irish government agreed to the deal offered by Apple in 1991 to tax only certain elements of the business. This made Apple’s taxes suddenly drop to 12.5%, compared to the US (21%). All of Apple’s revenue generated from India, Europe, and the Middle East is taxed in Ireland.
But an investigation by the EU revealed that Apple has paid only 1% or 0.5% taxes instead of 12.5%. They also accused the Irish government of collusion with Apple, because Ireland does not want Apple the largest employer in the country to leave Ireland.
Appleâs Strategy of Creating Two Subsidiaries
Apple’s operation strategy before 2017
Apple created two subsidiaries in Ireland, “Apple sales International“to hold rights of Apple intellectual property to sell and under a “cost-sharing agreement” with Apple Inc. to manufacture outside of South and North America named “Apple Operations Europe“. The Head office of these companies is on paper only and they are controlled by board members mainly based in the US.
Now, these two companies yearly only pay for research and development to Apple Inc. in America. By doing this Apple sales International kept all the revenues and profits generated from India, Europe, and the Middle East.
In 2011, According to US Senate, Apple sales International recorded a profit of $22 billion. But under the agreement with the Irish government only $50 million were taxed and it kept decreasing until 2014.
Before 2017, the US tax system doesnât put taxes on the profit obtained from the multinational companyâs foreign subsidiaries unless they are transferred to the parent company as dividends (changed in 2017). Which is, while compared with the foreign country taxes, is way much higher.
There is a term called âDeferred Taxâ, which means the income tax that a company will pay in the near future instead of paying immediately, which might be a big shock to the bank balance.
Apple has taken that advantage by transferring over 70% of its domestically obtained profit to the tax haven, thus putting those profits in the deferred tax category of the company.
As per a report from 2017, Apple was avoiding paying almost $78 billion dollars of taxes at that. In Ireland, Apple had three subsidiaries, which played a significant role in the game of Tax Avoidance.
Unfortunately, this game has not been a smooth ride for the technology giant. It has to face some consequences for its tax avoidance strategy.
In 2013 an investigation revealed that two of the subsidiaries of Apple in Ireland are formed in a way that has helped them in avoiding paying taxes to both the country, U.S. and Ireland.
On 29 August 2016 European Commission declared that Apple has used Ireland, and had received illegal tax benefits from the country.
The European Commission instructs Apple to pay almost $15 billion dollars along with interest to Ireland for not confiding with the rules and not paying proper taxes.
The Irish Government took the side of the tech giant and stated that no tax law has been violated.
In the month of November of the same year, Tim Cook appealed against the instruction.
In 2018, Apple paid around âŹ14.3 billion in back taxes and interest that was due to Ireland. The money was held in an Escrow fund.
Present Condition of Apple and Taxes
After a long battle with the European Commission, in July 2020, the European General Court gave a decision in favor of Apple and the Irish Government.
This automatically became good news for the Technology giant as it does not have to pay a huge amount. At present, the European Commission has decided to appeal again, and this time in front of the highest court, the Court of Justice of the European Union (CJEU).
Conclusion
The bigger the business, the bigger will be the risk. Apple Inc. is not an exception here. As stated before, the human mind is amazing. Companies like Apple will always find a way to deal with complicated matters in legal and sharp ways.
FAQ
What is the revenue of Apple?
As of 2022, Apple has reported its revenue in the USA was 99.8 billion U.S. dollars. While global revenue reported by Apple was 365.82 billion U.S. dollars in 2022.
Who Is The CEO Of Apple?
Since August 2011, Tim Cook is the CEO of Apple.
Which is the best Tax Haven?
Cayman Island is considered the best country as Tax Haven.
It was in May 2022 that news began circulating about the worldâs largest technology companies that lost over USD 1 trillion in value over just three trading sessions. Â This was in direct response to the Federal Reserve raising its benchmark interest rates.
The year-over-year inflation rate has remained abnormally and consistently high and peaked in June 2022 at 9.1%, according to the Consumer Price Index Data. Â It fell to 8.2% in September 2022, which was well above the inflation rate of 2% that is preferred by the central bank.
The Federal Reserve Bank has been struggling to control and bring down the inflation rate, and working towards this had announced a 0.75% interest rate hike. Â This is the sixth interest hike by the Federal Reserve in the hope that it can cause prices to reduce by slowing down the economy.
Top Companies Valuation (2020-22)
As stocks at large began selling off with the Federal Reserveâs announcement of yet another interest rest hike, the technology sector felt the tremors more than any other sector. Â The worldâs most valuable company, Apple, shed USD 220 billion followed by Microsoft which lost USD 189 billion, Amazon declined by USD 173 billion, Alphabet lost USD 123 billion, and Meta which lost USD 70 billion. Â Investors are also showing an increasing interest in pushing their money toward the safer market pockets as opposed to stocks that drove business during the strong bull market in recent years.
As much as the numerous interest rate hike by the Federal Reserve Bank have impacted trillion-dollar companies to lose valuation, the entire burden for this decline does not rest on its shoulders alone. Â There are reasons, external and internal, that hugely impact the fluctuation in a companyâs valuation.
External Factors
Many external factors affect the valuation of any company these includes-
Government Policies
Macro-Economic Forces
Industry Life Cycles
Companyâs Own Life Cycle
Personal Needs and Desires of the Owner
Capital Markets
Each of these factors is of considerable importance which makes it tough for a company to accurately time any transaction. Â However, historically, credit markets have proven to be one of the most powerful external forces that decide thevaluation of a company. Â There are two primary reasons for this.
1. Rate of Return
Economic risks are measured by determining the rate of return required for an equivalent investment facing an equivalent level of risk, known as the âdiscount rateâ. Â Simply explained, it means that as the interest rates go down, current values go up which ensures that the companyâs valuation increases. Â Contrarily, the higher the interest rates, the lower the valuation as borrowing money becomes more and more expensive. Â This decreases a companyâs valuation.
2. Supply of Money
This particular concept heavily influences business valuations. Â As the economy slows, the Federal Reserve lowers the interest rate driving the capital markets to loosen purse strings by buying stock cheaply. Â What then happens is that there is more money that competes for a limited number of assets which, then, consequently, drives valuation higher making investors take on more risks due to easy access to debt and lower discount rates. Â This period of speculation ignores the fundamentals where the growth is high.
Internal Factors
An Enterpriseâs value also depends on these critical micro-business valuation factors which are largely internal and within the control of the management team.
Companies that lose valuation do not do so overnight. Â There are warning signs that come to the fore before the actual valuation drops. Â These warning signs, if not recognized and corrected at the right time can prove to have devastating effects on businesses.
A sharp drop in revenues
Delayed payments to creditors
Default on statutory payments
Delay in payment of employee salaries
Numerous red flags were raised by auditors, analysts, and fund managers in the annual accounts
Huge churn in the companyâs top management
Company stocks being sold off quickly by institutions
Promoters exiting their stake
Deteriorating performance in comparison with competition
Consistently dropping return ratio on ROE, ROCE, ROA, NPM, OPM, etc.
Here are the famous top 3 companies that lost 1 Trillion in Market Cap
Economic downturns are a harsh reality in the global world. Â However, if companies are consistently losing valuation despite external factors like stable federal reserve interest rates and a bullish capital market, the reasons are more than likely internal. Â It is, then, to an investorâs advantage to conduct a deep study of the business itself and its internal functions to realistically assess the risks of investing.
FAQs
Did Amazon Lose $ 1 Trillion and What Are the Reasons?
Yes, Amazon becomes the world’s first publicly listed company to lose its $1 trillion market cap. Worldwide economic slowdown, the Ukraine-Russia war, rising inflation, and tightening monetary policy are the key reasons for Amazon’s loss.
Which Company Is Not a Part of The $ 1 Trillion Market Capitalisation Club Anymore?
Amazon, Tesla, and Meta (Facebook) are not part of a trillion-dollar market now.
What Skills Are Required to Predict the Shrinkage of Organizations?
Understanding Macroeconomics, consumer behavior, and socio-political happenings are vital for an understanding of business workings. By applying mentioned knowledge one can forecast to some extent.
Here’s a thorough WeWork case study briefing the history, business model, and the fall of WeWork from the pinnacle of success. WeWork is an American organization that gives shared workspaces to other companies and organizations.
Established in 2010, it is headquartered in New York City. WeWork oversaw 46.63 million square feet of space in 2018. WeWork structures and fabricates physical and virtual shared spaces and office administrations for people and companies. WeWork has over 700 locations in 38 countries for workspace.
In January 2019, the firm declared its plan to rebrand as “The We Company”; it was valued at $47 billion at that time. In that year, troubles started brewing for the company.
Adam Neumann left his position as the CEO and surrendered a greater part of ballot control in WeWork from 26 September 2019. WeWork also postponed its arranged securities exchange posting until the end of 2019 as issues began to arise in its corporate administration, valuation, and other business aspects.
On September 30, 2019, WeWork officially pulled back its S-1 documentation. The proposed IPO was thus delayed. The organization’s valuation fell below $10 billion, not exactly the $12.8 billion it had raised since 2010.
In May 2008, Adam Neumann and Miguel McKelvey started GreenDesk, an “eco-accommodating coworking space” in Brooklyn. In 2010, Neumann and McKelvey sold the business and began WeWork. Its first area was New York’s SoHo district with halfway financing from Manhattan land designer Joel Schreiber who obtained a 33% stake in the organization for $15 million.
WeWork Founders – Neumann and McKelvey
By 2014, WeWork was considered “the quickest developing renter of new office space in New York”, and was on track to turn into “the quickest developing tenant of new space in America. “During the monetary emergencies, there were these vacant structures and these individuals outsourcing or beginning organizations,” Neumann told the New York Daily News.
“I knew there was an approach to coordinate the two. What isolates us, however, is community.” WeWork collaborated with several organizations, including new businesses such as Consumer, HackHands, Whole Whale, Turf, Fitocracy, Reddit, and New York Tech Meetup. In 2011, PepsiCo put a couple of representatives in the SoHo WeWork, who went about as guides to littler WeWork part companies.
The first WeWork Labs opened in New York’s SoHo in April 2011. WeWork Labs works as a startup hatchery, furnishing an open workspace to empower joint efforts among individuals who “don’t have their business-related thoughts completely cooked.”
WeWork Labs
Rapid Expansion of WeWork
The company had 51 cooperating areas in the US, Europe, and Israel in January 2015â twice the same number as it had towards the end of 2014.
On June 1, 2015, WeWork reported that Artie Minson, previous Chief Financial Officer of Time Warner Cable, would join the organization as President and Chief Operating Officer.
On March 9, 2016, WeWork declared that it raised $430 million in another round of financing from Legend Holdings and Hony Capital Ltd., pegging the organization at $16 billion at that time.
By October 2016, the organization had raised $1.7 billion in private capital. In October 2016, the organization reported its arrangements to open a fourth area in Cambridge/Boston region. It opened workspaces in Boston’s Leather District and Fort Point in 2014.
On January 30, 2017, the Wall Street Journal composed that SoftBank Group Corporation is gauging speculation of well over $1 billion in WeWork Corporation, in what could be among the principal bargains from its new $100 billion innovation fund.”
In April 2017, the organization began offering wellness classes in some of its areas and opened an exercise center at a New York location. In July 2017, the valuation of the organization came to around $20 billion.
WeWork Valuation from 2012 to 2022
Later that month, it was reported that WeWork would expand to China using $500 million contributed by SoftBank, Hony Capital, and different loan specialists to shape “WeWork China”.
In September 2017, WeWork ventured into Southeast Asia through the acquisition of Singapore-based SpaceMob, and it put aside a financial limit of $500 million to develop in Southeast Asia, the home of more than 600 million people. The association’s top rival in China is Ucommune, the main Chinese unicorn in the coworking space.
In late October 2017, WeWork purchased the Lord and Taylor Building on Fifth Avenue in Manhattan from the Hudson’s Bay Company for $850 million. The arrangement incorporated the use of floors of certain HBC-claimed retail chains in New York, Toronto, Vancouver, and Germany as WeWork’s shared office workspaces. The deal was formally finished in February 2019.
WeWork was established in New York in 2010 to offer cooperating spaces to business visionaries, new businesses, specialists, and enterprises. WeWork has developed quickly, making it one of the biggest and most obvious cooperating chains on the planet.
It presently has representatives in over 700 areas around the world, incorporating stations in many U.S. urban areas and 38 nations that include Brazil, Germany, and Thailand.
How Does It Work
Superficially, WeWork’s business model resembles a moderately ordinary land play. Over the 700+ areas it operates in, everybody from solo business people to enormous organizations can lease everything from a work area to a private floor. WeWork is not the same as your normal land organization â it conveys an incentive to the inhabitants and the landowners.
WeWork gives its occupants something that is conventionally elusive, an on-request adaptable space with momentary leases (even on a month-to-month premise at times). This takes care of the problem of continuous shifting, one that affects developing businesses.
The process of shifting involves finding another office space, moving in, marking a long-haul rent, rebuilding the space, and moving out to begin everything once more elsewhere.
At the point when an organization exceeds its WeWork participation, it can move up to a progressively extensive alternate space, a private office, or even a private floor â diminishing erosion from changes. Clients don’t need to consider all the particulars of leasing office space, and they gain admittance to a lot of office advantages (free espresso, quick web, etc).
For landowners, WeWork offers huge incentives, including higher rents, an extended inhabitant pool, and increments in land esteem. In a blog entry distributed in 2018, the organization announced lease premiums between 15-29% in structures it managed in New York and Los Angeles. WeWork claimed a generation of $250 million in extra income for proprietors in New York, Chicago, and Los Angeles alone.
Space Used by WeWork
WeWork feels managing a business workspace is an intense issue regardless of how enormous (or little) your association isâ and it’s once in a while a center competency. Consultants and the employees of nascent stage companies don’t have the financial backing to pay for office space, and end up telecommuting or working out of some stop-hole arrangement.
A below-standard working space could restrain joint effort and profitability. Small and medium-sized organizations battle with spending requirements and restricted assets, and development directions can make space needs a moving objective.
Venture associations face close consistent strain to cut expenses and increment productivity â land and activity costs can be a difficult barrier to cross. WeWork positions itself as the answer to these issues. By giving turnkey, versatile workspace arrangements, the organization vows to wipe out the contact associated with finding, involving, and dealing with a workspace.
Consultants and new companies get the advantages and preferences of having an office space without the expenses and obligations that accompany it. Small organizations get adaptable, reasonable space alternatives that can be reconfigured as needed.
WeWork rents a couple of floors of a structure from a property director in a high-thickness urban zone. It revamps the space to incorporate a blend of private workplaces, meeting rooms, parlors, and open workspaces.
It adds additional facilities such as espresso, office supplies, and brew on tap. WeWork pivots and leases workplaces to a blend of specialists, solopreneurs, new companies, and huge organizations.
WeWork essentially fits a larger number of bodies into its spaces than a run-of-the-mill corporate office. The normal per-individual office space in the United States is just shy of 200 square feet, as indicated by the US General Services Administration.
WeWork individuals can anticipate under 100 square feet. WeWork does this without yielding specialist profitability or fulfillment. Indeed, a central guarantee at WeWork is that its spaces are deliberately intended to cultivate greater efficiency and more development.
Services Added With Value by WeWork
Another factor adding to WeWork’s guarantee of “greater profitability, more development” is the worth-added administrations the organization offers to individuals. In 2018, it relaunched WeWork Labs, a hatchery-style program for new companies planned for helping them develop their business.
In February 2019, the organization reported a redo of the WeWork application, complete with new ability-sharing highlights planned for making it simpler for clients to discover, interface, and team up with different individuals.
Once individuals enter the WeWork environment, it becomes hard for them to leave owing to the benefits. The organization’s open recording archives report a net enrollment consistency standard of 119%.
WeWork Space
WeWork’s developing exhibit of significant worth included administrations â going from espresso and office supplies to showcasing programming and an administrations commercial center â push it past a basic landowner into a sort of full-administration proficient “hatchery” where an individual can arrange, and develop their business, adopt new abilities, and have the everyday details of dealing with a workspace dealt with.
On the off chance that an organization or individual moves to another city, there will be another WeWork space sitting tight for them. If a vital accomplice or specialist organization is required, WeWork can help find the ideal option. What’s more, as the organization develops from a little startup to a large organization, WeWork’s administration scales to keep up with the upgrade.
Analysis of Data
An essential piece in the WeWork ecosystem is the utilization of information. WeWork has for quite some time been utilizing information to advise participating organizations on areas, where they ought to be set, and what the blend of workplaces, workspaces, and courtesies should be like.
WeWork started to create products out of its information capacities with the “space-as-an-administration” offering “Powered by We”. Presented in 2017, Powered by We denotes a critical change for WeWork.
Earlier, WeWork’s administrations were limited to the spaces that it involved. Through Powered by We, the organization started to grow its range outside its leases into the organization’s current spaces.
This has a one-two-punch impact, empowering the organization to order the more significant expenses that accompany serving endeavor customers, while simultaneously shedding one of its most noteworthy wellsprings of both expense and hazard â the leases themselves.
Share of Workspace
The common workspace level is the least worth offering that WeWork has â not the organization’s most beneficial part, but a significant establishment for what’s worked above it.
These mutual workspace collaborations are what many pictures when they hear the words “cooperating space.” Members come in every morning and either snatch any accessible work area space in a typical zone if they have what WeWork alludes to as a “sweltering work area” enrollment or, for $100 or so extra a month, settle in at their very own committed work area in the common workspace.
As indicated by the WeWork site, these common workspaces are intended for new businesses and little organizations, specialists, advisors, and telecommuters. Hot work area participation starts at $190 every month and can reach upwards of $600 in costly urban communities like San Francisco. Committed work areas run from $300 to $700.
Central Station by WeWork
The level above office suites, central station by WeWork will be WeWork’s “white name” answer for big business customers. Instead of setting the organization up with a space inside a current WeWork premise, the central station is set up in independent areas sourced by WeWork in an area of the customer’s decision.
Customer organizations pick one of four “configurable designs,” running from an open warm-up area to official suites. Customers also pick inner staff to oversee everyday tasks for their area, with WeWork taking what the site alludes to as an “in the background” job.
WeWork Labs
A striking case of how WeWork uses esteem-added administrations to draw organizations into the WeWork system comes as WeWork Labs. WeWork Labs is WeWork’s “worldwide development stage” â an in-house startup hatchery that enlarges the central WeWork workspace offering extra highlights, including devoted program directors, week-after-week occasions, pitch evenings, workshops, and financial specialist presentations.
Relaunched in 2018, the program is at present offered in more than 700 areas â 154 in the United States and others in significant urban communities over the world, incorporating Brazil, China, Israel, Singapore, the UK, and Thailand, among others.
The organization said 1,000 new businesses have been brooded through the program as of December 2018.
The key factor that separates WeWork Labs from other startup quickening agents is the plan of action; instead of the standard hatchery model of taking value in the business, WeWork Labs charges a level expense, basically an up-charge to what the startup would some way or another compensation for space at WeWork.
Costs for the program’s US areas go from $300 – $600 every month. There’s a key measurement to WeWork Labs too as effective organizations move on from the program and develop into undeniable organizations, they become potential clients for WeWork’s growing suite of administrations.
The We Co., the American firm which works collaborating office spaces under the WeWork brand, has posted vigorous income development in India, even as it reels under huge misfortunes universally, demonstrating the organization’s first open administrative recording.
We Co. posted an overall deficit of around $689.7 million and an income of $1.54 billion in the initial half-year of 2019. According to a report by Reuters, it is hoping to raise $3-4 billion through the first sale of stock (IPO), which is probably going to be propelled in September this year.
Since its entrance in India in 2016 through an organization with Bengaluru-based Embassy Group, WeWork has been forcefully extending its impression. At present, its services are available in over 40 locations in 6 cities.
Internationally, We Co. is available in over 700 areas in 38 nations. According to the recording, the organization earned $3.5 million in the executive’s expenses in the half-year finished on June 30, enlisting a 118% bounce from $1.6 million in the year-back period.
In January 2019, the organization’s valuation was expressed as $47 billion, however by September when an IPO was arranged and deferred, the valuation was decreased to $10-12 billion.
Throughout the final quarter of 2019, WeWork’s evaluated market capitalization has kept on falling to a limited extent because of various examinations of Neumann’s conduct and strategic approaches.
In 2018, WeWork’s misfortunes and income both multiplied. As per the Financial Times, the organization lost $219,000 every hour of every day from March 2018 to March 2019.
As of December 20, 2022, WeWork’s net worth is $1.03 billion only a drop from $21.76 billion (2021).
In January 2019, WeWork declared that it would move into a two-story structure in Tampa Heights in 2020 as a component of its venture into Tampa.
On April 29, 2019, WeWork was documented privately for an IPO. On July 18, 2019, Wall Street Journal detailed that Adam Neumann sold $700 million of his WeWork stock before its IPO. The organization was hoping to raise over $3.5 billion from its IPO.
The We Company recorded S-1 desk work to go public. Media inclusion featured the organization’s overwhelming misfortunes uncovered by the S-1 documenting disclosures, while experts communicated apprehensions over WeWork’s capacity to end up productive later on. The IPO unveiled that WeWork faced $2 billion in losses in 2018.
Adam Neumann left his position as the CEO and surrendered a greater part of ballot control in WeWork from 26 September 2019. WeWork also postponed its arranged securities exchange posting until the end of 2019 as issues began to arise in its corporate administration, valuation, and other business aspects.
On September 30, 2019, WeWork officially pulled back its S-1 documentation. The proposed IPO was thus delayed. The organization’s valuation fell below $10 billion, not exactly the $12.8 billion it had raised since 2010.
Smartkarma, an expert on speculation research expressed, “We can’t understand the reshaping’s that would be important to verbalize a way to gainfulness here,” and noted it didn’t anticipate that the organization’s valuation should go beyond $20 billion.
Future of WeWork In India
WeWork India has its services available in over 40 locations in 6 cities with over 62,000 members occupying over 5 million square feet of space. Â
WeWork India
Since the dispatch of the American shared workspaces supplier in India, the Bengaluru-based Embassy Group had put $181 million into the WeWork partner. The target at present is the six main markets in the nation, including Bengaluru and Mumbai.
The raising support plans come amid discussion around WeWork’s first sale of stock. WeWork’s parent, The We Company, pulled back its IPO seven days after the SoftBank-backed adaptable office startup removed author Adam Neumann as its CEO.
“Despite everything, we keep up a great association with WeWork all-inclusive and will hold the brand,” said Karan Virwani, chief of WeWork India.
The organization had hold of the establishment for WeWork in India till the end of 2021. It might want to hold onto the brand; however, WeWork holds the main right of refusal and can purchase out the Indian Realty designer.
International Haven Group had paid around $200 million for the establishment two years prior. The Realty conglomerate holds an 80% stake in the establishment.
Independently, Embassy Group intends to concentrate on business, modern, collaborating, and co-living portions to grow its impression in the nation.
FAQs
Does SoftBank still own WeWork?
Yes, Softbank holds about 65% of the equity in WeWork.
What happened to Adam from WeWork?
Adam Neumann resigned from the position of CEO and gave up majority voting control in 2019.
Can WeWork be profitable?
It is hard to tell that WeWork will be profitable ever. The company has a negative cash flow. According to WeWork’s initial-public-offering disclosures, its losses are running ahead of its revenue. WeWork is not profitable on its preferred metrics either.
What is the problem with WeWork?
The problem is it has a negative cash flow. According to WeWork’s initial-public-offering disclosures, its losses are running ahead of its revenue. WeWork is not profitable on its preferred metrics either. Also, its whole business model is flawed with excessive leverage.
Does WeWork make money?
WeWork expects revenue of around $5 billion in 2022. On other hand as of December 20, 2022, WeWork’s net worth is $1.03 billion only a drop from $21.76 billion (2021).
The article has been contributed by the QuickCompany’s team
India has secured the 3rd most prominent position in the world as an ecosystem for startups with a strength of 77,000 DPIIT-recognized startups across 656 districts, while China and USA hold the second and first positions, respectively. Since 2014, it is remarkable how India has climbed up to secure the place. It is a moment of pride that India has left China behind in the global unicorn race, with funding CAGR(Complex Annual Growth Rate) between 2014 to 2022 of 49% in India against 12 % in China and 33% in the USA; as well as year on year growth of unicorn in India by 300% between 2020 and 2021 in comparison to China with 267%.
This count is reported as of 29th August 2022, making India rank 2nd in innovation quality and 1st in the quality of scientific publications, as well as in the rate of universities among developing economies. Between 2014 and the first quarter of 2022, 57,000 startups were launched in India, out of which 100 have entered the Unicorn Club, and 17 are listed.
Bengaluru is known as the startup capital of India, whereas Maharashtra has the highest number of startups in India.
Indian States and Union Territories Contributing to the Startup Ecosystem
The innovations are expanding beyond the specific sectors, unlike a few years back. The recognised startups in 56 industries are divided into 13% from the IT industry, 9% from pharmaceutical and health care, 7% from ed-tech, 5% from professional and commercial services, 5% from agriculture and 5% from food and beverages.
According to the Economic Survey of 2021-22, DPIIT recognised more than 61,400 startups, of which at least 14,000 were recognised during the fiscal year 2022. This contributes to a growth projection to put forward a GDP examining the performance of several sectors and suggests future movement.
On average, 555 districts of India had at least one new startup, which makes it evident that India has remarkably encouraged the startup mindset over the past six years, mainly in IT and knowledge-based sectors.
Top 4 Indian States Bagging the Funding
“Startups in India have grown remarkably over the last six years. The number of new recognised startups has increased to over 14,000 in 2021-22 from only 733 in 2016-17,” the survey claimed.
2022 has been marked as a significant year for startups, as it has witnessed the crossing of milestones of 100 Indian startups to enter the Unicorn club. Until October 2022, IT and Fintech showed the highest number of entries, whereas blockchain and consultancy showed the lowest.
Industry-Wise New Membership to Unicorn Club in 2022
A huge announcement is made by BITS Pilani, allowing students and faculty members to take time off for up to 1 year to start their ventures with a target to encourage and nurture entrepreneurship in India.
Moneycontrol had reported earlier that at least one founder of over 73 of India’s more than 100 unicorns came from one of the country’s 23 IITs. According to Tracxn Technologies data, BITS Pilani alumni have founded over 900 startups, with over 13 making it to the list of Indian unicorns, including Zeta, MPL, Swiggy, BigBasket, and Groww. Hari Menon of Big Basket, Sriharsha Majety of Swiggy, and Phanindra Sama of redBus are all alumni of BITS.
As of now, 22 startups have joined the unicorn club in 2022. Here are the top five among them:
Top Indian Unicorn Startups in 2022
The other Indian unicorn startups of 2022 are:
Fractal Analytics
LEAD School
Darwinbox
Livspace
Xpressbees
Hasura
CredAvenue
Amagi
CommerceIQ
Oxyzo
Open
PhysicsWallah
Purplle
LeadSquared
OneCard
Tata 1mg
Molbio Diagnostics
Conclusion
Over the past two years, India has witnessed the inflow of extra cash that resulted in drawing massive investment to Indian startups, including some making the IPOs launched exceedingly profitable. As growth-stage investors such as Tiger Global, Coatue, and Softbank have quit the market, startup values have fluctuated at a high speed. Several startups were valued based on price rather than vision, and now it is a challenge to contend with the harsh realities of the natural world, which values businesses based on free cash flow.
This scenario is likely to persist for the next 12â18 months until the economy begins to reset to a new normal. Meanwhile, the challenge to startup CEOs is to focus on achieving quantifiable achievements and genuine business payoffs, making the time engrossing for the Indian startup ecosystem.
FAQs
Which Indian city has the most number of startups?
Maharashtra has the highest number of startups in India.
Which Indian startups entered the unicorn club in 2022?
As of September 2022, 22 Indian startups have entered the unicorn club, including Fractal, Uniphore, LEAD, CredAvenue, Open, Amagi, Games24, DealShare, Xpressbees, and PhysicsWallah.
How many startups are started by BITS Pilani alumni?
According to Tracxn Technologies data, BITS Pilani alumni have founded over 900 startups, with over 13 making it to the list of Indian unicorns, including Zeta, MPL, Swiggy, BigBasket, and Groww.
Marketing is one of the most important factors for any kind of brand. If they want the existence of their brand to be known, the marketing of that brand has to be done right. Advertising is one of the main parts of marketing. When you advertise, the audience starts knowing about your brand and it creates a demand for your product or services amongst your potential buyer. When we talk about advertising, billboards are one of the main aspects of them, and when it comes to Billboards what is better than Times Square?
In this article, we will talk about the biggest advertising hub in the world and will decode how it has contributed to the success of so many brands. So, letâs not wait anymore and get started with the business.
âItâs pretty cliched, but Times Square is just incredible. You really feel like youâre in the capital of the world.â
To be honest, there is hardly anyone who doesnât know what Times Square is. It is a tourist destination located in the neighbourhood of midtown Manhattan in New York City. Not to forget, it is an entertainment centre and a vital commercial intersection that is filled with billboards and advertisements.
As it is one of the busiest areas and over 360,000 people pass through this place daily, advertising here is one of the best if not the best option for brands. It is also said to be the most visited tourist place and it welcomes over 50 million people every year. This place deserves to be called the advertising Mecca because of its location and all the other reasons; this is also a place where billboards are the most expensive ones that are out there.
History of Times Square
Old Times Square
Now that we know, what Times Square is, let us unravel its history and how it came into existence. The 42nd Street at Longacre Square was renamed Times Square in 1904 and just three weeks later the first electric advertisement was put on there. The whole area is not only filled with advertisement boards that are larger than lives but it also is home to multiple theatres and restaurants.
During World War I, theatres were moved down to Times Square from other entertainment districts. Before Times Square became the area that we know, it was a place where crimes were quite common but now different and new technologies are used to make the advertisement more eye-catching and grand.
Why Times Square Ads Are So Famous
Some of the benefits one gets from advertising in Times Square are:
When you advertise your brand in a Billboard located in Times Square, and then naturally it means that youâve made it to a place where youâre able to afford it, it leaves out the status of your brand.
In a day over 360,000 people pass through it, so the chance of your brand not getting noticed is minimal to none.
Thousands of advertisements can be seen in Times Square but there are some creative and grand ones and they are down below:
American Eagle
This American clothing mostly focuses on kids and teenagers. So when they launched a new collection they decided to place the ad on Times Square, the ad consisted of kids visiting Times Square who started dancing and having a blast on the roads of Times Square. This generates a lot of attention as it involves involving and engaging its audience and this includes kids who happily advertised for them.
HP
One of the well-known technology companies HP came up with a jaw-dropping advertisement, it was so huge that it took up to 10 billboard screens to place the ad. The ad consist of Serena Williams challenging a robot and the fight continues on all the screens, it was no less than a movie.
Toyota
The company for their new car model Prius model hosted a drawing competition where they ask people to pull out their iPhones and submit their drawings and those can be seen on the billboard for other people to see. This was a great idea to engage with the audience and make them involved in the advertisement.
Domino’s
One of the most loved Pizza brands, Domino’s took a risk by creating an advertisement that consists of real reviews that are given by their customers and displayed in Times Square in front of everyone. It was a brilliant advertisement not to forget risky as well. This showed how the brand is not afraid of criticism and how it is so transparent towards the general audience.
Mini Cooper
Mini Cooper in Times Square
This brand of car from Mini Cooper created a unique advertisement by developing and placing small cars beside the billboard and showing their new models to the general audience. Attaching a car next to a billboard on the side of a massive skyscraper, created quite a hype.
Brands That Advertise in Times Square
There is hardly any well-known brand that has not been advertised in Times Square. From launching new music or films by the entertainment houses to launching new models of cars and a collection of clothes from luxury brands everything can be found here. Some big brands like Chanel, Hyundai, Samsung, and others. The brands launched new campaigns and they can be seen here as well. Even birthday ads of celebrities are also grace here.
How Much Does it Cost to Advertise in Times Square?
It depends on different factors, that as the length of the advertisement, the type of the advertisement, and the number of props needed. The cost can be between $5000 to $50,000 per day.
Times Square is one of the biggest hubs of advertising, for any brand that wants to reach out to a large number of people, it is the best option to put up their advertisement on one of the billboards of Times Square. With technology, it is improving day by day and it looks like the hype for Times Square is here for the long run.
FAQs
Why is Times Square famous?
Times Square is the busiest pedestrian area and is one of the worldâs most visited tourist attractions. It is famous for loads of theatres and is the centre of the major entertainment industry.
How did Times Square get its name?
It is called Times Square when The New York Times took up its headquarters place in the building.
How much does it cost to advertise in Times Square?
It costs approximately $5000 to $50000 to put up an advertisement in Times Square.
How to get a billboard in Times Square?
You can book your slot by visiting Times Square’s official website. Pick a date, upload a photo, and complete the process by making the payment.
In 2021, the global art market value was $65.1 billion. Art possesses the ability to motivate us, enhance our environment and life, and enable us to perceive things from other’s perspectives. It’s been typical for those with money and prestige to spend millions on it since the Revolution and even before that.
Often we hear paintings getting sold for thousands of dollars or so at the auction these days, it makes you wonder what inspires someone to pay a fortune for artwork.
Important Motivations Among Art Buyers Worldwide as of January 2022
Let’s look at these 14 reasons why wealthy individuals prefer expensive paintings.
In several countries, including the United States, tax regulations favor you if you purchase expensive art frequently. For example, if you sell an artwork and deposit funds in a bank, you are ought to incur capital gains tax on it, however, if you invest in another artwork with the same funds, you’ll escape paying taxes.
Prestige
An artefact that looks perfect, and which was also made by a world-famous artist, is unique, and in certain scenarios is a well-known creation, will offer the bidder quite the thrill once the hammer drops at auction. A strong feeling when we see something we’ve wanted for years, the same feeling will indeed be amplified if it’s a Monet, Van Gogh, or Hearst.
Investment
Most individuals buy stuff as they intend to invest in it. Some people buy houses to reside there. Some of them think of it as a long-term investment, an asset providing them with monthly earnings while also increasing in value over time. Art, too, is a strategic idea to invest in.
Owning modern art for âŹ400 today might be worth âŹ600,000 in 10 years. In about 10% of situations, indeed, fine art has consistently fetched increasingly better returns over the last 50 years.
One can be sure that when they get their hands on a Leonardo da Vinci, it will smash records. In 2017, his painting Salvador Mundi sold for a record-breaking $450 million. This is why itâs an insanely important aspect of why the rich buy art.
Leonardo Vinci’s Salvator Mundi
Diversifying your portfolio
Because art is indeed going to increase in value if it already has a significant value and is somewhat risky, you may consider investing in some art to diversify your holdings, particularly if you’ve got a large, highly high-value portfolio or want to make art a small component of it.
The main principle, regardless of the worth of your investments, is to have variety. If you have a few high-risk stocks and a large number of safe stocks or you’re extremely wealthy, have billions in shares, bonds, and real estate, and would like to invest more in something risky but thrilling? Investing in artwork seems logical at this point.
An aspect of your lifestyle
Previously, the wealthy went shopping for fashion, fancy cars, or yachts; but, times have changed. Art has become a must-have thing for the rich. Â Nothing beats being an art lover if you’re glamorous and want people to appreciate it. It’s not only about possessing it; it’s more about being seen at auctions and exhibitions.
While art is typically a high-risk asset, it has several unique advantages.
Art market rate fluctuations are different from share market price swings, implying that they could be used to hedge against a recession or crisis.
People purchase art during times of risks and uncertainties and profiting, such as during WWII. Today in nations with unstable economies and currencies that are subject to depreciation, the wealthy frequently invest in art as a means of diversifying their risks.
To enrich their environment
Almost everyone wants their homes and offices to appear attractive and feel better in them, and regardless of whether us being wealthy or not, we design them to make the time we spend there more enjoyable. Rich people whether it’s their multimillion-dollar homes or the workplaces of the businesses they manage, they’ll do the same for it.
To boost imagination
It’s no surprise some of the world’s top talented artists invest in art, and owning beautiful art on your walls will surely spark your imagination. Some celebs who possess art are incredibly innovative, and this isn’t limited to those who work in that industry. Startups and corporate leaders can be inspired by art as well. Perhaps it’s because artists are creative and bold, traits that entrepreneurs like and appreciate when they see a wonderful piece of artwork.
To brag about it
Investing intelligently in the equity market or in a prosperous firm you manage, demonstrates your financial acumen. You may be flaunting by purchasing a fancy home, a yacht, or a Ferrari, but it is also something essential that you will utilize.
Even if it’s a solid investment, purchasing a work of art worth $1 million demonstrates exceptional choice, however, there’s something indulgent about it since it’s something you wouldn’t need but desire. When you’re wealthy, you’re more inclined to want to flaunt it, and art is a perfect way to do so.
Quality
Usually, the rich purchase fancy clothing because they value quality over cost. You can own a masterpiece lasting hundreds of years and even be bequeathed to your children. The caliber of art gives you the feeling that you’re purchasing something valuable that will outlast your legacy.
Although kids who inherit valuable artwork seem to be keener on selling them than preserving them. This isn’t surprising, since parents and children often have different preferences, and the urge to sell the art mom and dad used to adore for a six-figure price might be impossible to deny for certain individuals.
If you possess a luxury condo that you rent to super-rich with taste, hanging some pricey artwork is one approach to boost the rent prices. Not only that, but it also raises the property’s worth. In some ultra-exclusive groups, art is anticipated to cost the same as a typical home, and a modest picture of Van Gogh’s starry night is believed to not cost about the same as a conventional house.
To set up Art Galleries
The wealthy all across the world enjoy buying art and displaying it in exhibits where they discovered it, often with their signatures on it. In some circumstances, where self-interest is a prominent factor, there are very specific advantages to establishing art galleries. When the hella rich in China open an art gallery, it’s usually because it’s a tried-and-true method of obtaining approval for real estate deals.
Cultural pride
Over the last 20 years, the quantity of pricey masterpieces from China and Africa specifically has increased dramatically, notably among purchasers from such countries, implying that when you are wealthy, it is natural to want to acquire fine art that makes you proud of where you came from and demonstrates your love of your culture.
We’ve now arrived at the truly evil aspect of the art business, namely, money laundering for organized crime. The wealthy people who earned a fortune through illegitimate ways would suppress their sources of wealth from the regulators, and expensive art deals are the optimal method to do so. Â
Now we know why pricing is very subjective, and even specialists have difficulty in determining value. Inflating the worth of a piece is simply based on what you want it to be.
Deals are frequently made behind closed doors and discreetly. Although current laws on how art sales are done have indeed been strengthened, it’s logical to conclude that money laundering remains a major factor in global art purchases.
Conclusion
Even if they donât know much about art, most people choose to have it because of their love or have some sentiment attached to it. They consider it as an investment as it helps them to diversify their portfolio. And lastly, they do want others to appreciate it if they have paid a high price for that artwork.
FAQs
Why do rich people buy paintings?
Rich people buy paintings to diversify their portfolios, design their homes or avoid tax.
What is the most expensive painting ever sold?
Salvator Mundi by Leonardo Da Vinci is the most expensive painting priced at $450 million.
Is art used for money laundering?
Yes, many wealthy people who earned a fortune through illegitimate ways often launder money through art.
The definition of credit is the practice of borrowing money, either as a loan or for purchase with the promise of paying off the debt within a stipulated period of time. A credit score is defined as a statistical method to ascertain the likelihood of an individual paying back the money that is owed to them.
A credit score is essentially used by lenders, physical or online, to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. It is used to determine who qualifies for a loan, the interest rate, and up to what credit limit. Organizations like mobile phone companies, landlords, and government departments also use the credit scores of individuals to ascertain their creditworthiness.
Credit score is important to measure the risk assessment of an individual by the credit issuer. This is especially employed when an individual applies for credit like a loan, mortgage, or credit card. It allows the financial institution, which is extending the credit, to check the individualâs reliability in repaying the debt in a timely manner. A lower credit score can result in a loan rejection or even a higher interest rate compared to someone with a higher credit score. The credit score is valuable only when the data collected is over a long period of time.
Components of Credit Score
Components of Credit Score
There are various factors taken into consideration when evaluating the credit scores of an individual. These factors all add up to either a high or low credit score.
Credit payment history of the individual (35%)
Current debts of the individual (30%)
Duration of time of credit history (15%)
Credit Mix (10%)
Frequency of applications for new credits (10%)
Credit Scores Calculation
Credit Information Bureau (India) Limited (CIBIL), established in August 2000, is the first credit information company in India. It is CIBIL that allows credit ratings to individuals and sends them to banks for a loan applicants, based on which a loan is either sanctioned or not sanctioned.
It is a two-way information exchange where initially all credit information of an individual is sent to CIBIL by the banks. This information essentially pertains to the repayment of loans and credit cards. Information is then computed by CIBIL into a number range between 300 and 900. Scores lower than 600 and closer to 300 are considered low credit scores and may lead to applications for loans and credit cards being rejected. A credit score rating of higher than 600 ensures a higher possibility of getting a loan or credit card. CIBIL maintains a historical record of an individualâs payment behavior pattern which is sent to banks on request.
This service was launched with a view to reduce bad credits as well as to instil habits leading to high credit scores and teach financial planning to individuals.
How to Maintain a Good Credit Score?
How to increase a credit score
A loan or credit card application may be rejected even if all other criteria like age and monthly income are met, due to a low credit score. A credit score of 750 or above is usually considered a good credit score. There are certain steps that an individual can take to ensure that he or she maintains a good credit score.
1. Payment on Time
Payments that are made on time indicate a responsible and healthy attitude towards credit, which helps in maintaining a good credit score. The opposite, in fact, may reflect a negligent attitude with poor financial planning and can have a negative impact on credit scores.
2. Apply for Only One Loan at a Time
Every time an individual applies for a loan, the banks check the applicantâs CIBIL score that lowers for every check that is triggered. This effectively lowers the overall credit score. The more loans an individual applies for, the lower the credit score.
3. Updated Credit Card Payments
Credit card bills can be paid either in full every month or can be kept active by paying the minimum amount that is indicated by the bank. However, CIBIL considers the unpaid amount as overdue which indicates poor personal financial management. This reflects in the individualâs history every time a check is triggered. It is always better to pay the credit card bill in full to maintain a healthy credit score.
4. Donât Close Credit Cards
Simply put, if all credit cards are closed, there is no avenue to build a credit history to lean on when a loan is required. It is ideal to maintain at least one credit card and maintain a healthy repayment history with the card to build up a good credit score.
5. Refrain from Payment Defaults
If there is an existing loan on any credit cards, ensure that all payments are made on time. Any misses or default gets recorded in the credit history can negatively affect the credit score and may also result in a loan being rejected.
6. Manage Expenses within the Earnings
When the spending exceeds the earning, it gives rise to credit which can lead to more spending and thus a collection of debt. It is wise to spend within a limit that can be supported by the earning which also adds to the overall credit score.
7. Balance the Loan Types
It is a healthy habit to keep a mix of loans. The idea is to balance secured and unsecured loans. If the loans are heavier on the unsecured credit side, personal loans or credit card loans, it acts as a red flag and makes lenders cautious about granting further loans.
Conclusion
The importance of maintaining a healthy credit score cannot be ignored. It is a gateway to getting a home loan or a personal loan as and when required. A high credit score also helps an individual in getting credit cards that is also another way to build a healthy credit history, eventually making a positive impact on the overall credit score of an individual.
FAQs
What is a good credit score in India?
A credit score of 750 and above is considered a good credit score in India.
Can I get a loan or credit card with a credit score of 500?
A credit score of 500 is considered to be a poor score, hence it is difficult to get approval for a loan or card with this score.
What is a CIBIL credit score?
CIBIL score is a three-digit numeric summary of your credit history.
What is the toughest credit score?
850 is considered to toughest credit score to achieve.
Imagine Marketing Services Pvt. Ltd., is the parent company that conducts business operations under the brand name âboAtâ and markets audio-focused consumer electronic products. It was incorporated in India in November 2013 by Sameer Ashok Mehta and Aman Gupta.
Its product repertoire includes wireless earbuds, wired headphones, wireless speakers, home audio equipment, smart watches, and a range of mobile phone accessories. The company also produces special editions of its various audio hardware products, which form a part of its promotions or collaborative tie-ups with other brands.
boAt has raised USD 177 million in funding over 7 funding rounds spread across 6 different venture capitalists. These were Fireside Ventures, Navi Loan, InnoVen Capital, Warburg Pincus, Qualcomm Ventures, and Malabar Investment Advisors. Below is a brief timeline of the year, the type of funding, and the amount raised.
Announcement Date
Transaction
Amount Raised (In Rupees)
October 28, 2022
Convertible Note
500 crores
April 16, 2021
Series B Funding
50 crores
January 5, 2021
Series B Funding
10 crores
September 1, 2020
Debt Financing
25 crores
July 26, 2019
Debt Financing
16 crores
July 17, 2019
Debt Financing
20 crores
May 3, 2018
Venture Round
60 crores
Reasons for Cancelling IPO
Why boAt Cancels its 2000 Crore IPO?
In February this year, boAt filed IPO papers with SEBI (Securities and Exchange Board of India) to raise a massive amount of INR 2000 crores. However, according to SEBI regulations, the company was allowed to raise a maximum of INR 180 crore equity. boAt succeeded in raising INR 500 crores (approximately USD 60 million) from its current investor Warburg Pincus and a new investor Malabar Investments through a private placement of preference shares. In light of receiving this amount of funding, boAt proactively delayed the launch of its IPO (Initial Public Offering). According to various reports, Malabar and Warburg Pincus will be able to convert those preferred stocks into equity at a valuation of INR 120 crores whenever boAt goes ahead with its IPO.
The primary reason behind the canceled IPO of boAt is the volatility that currently afflicts the global market at large, be it the ongoing Russia-Ukraine War, the impending recession, the stock market crash, etc. boAt has followed companies like Mobikwik, PharmEasy, and Droom by its IPO cancellation.
Future Plans of boAt with New Cash Infusion
Earlier, a majority of the boAt products were made in China, and boAt is now attempting to diversify its production base. Towards this end, it has formed a joint venture with Dixon. It has also moved a sizeable portion of its production to India where it now produces a million devices every month. Aman Gupta, Co-Founder and Chief Marketing Officer of boAt said â
âWe are the second largest player internationally in earwear and have established leadership in our core individual audio segment. Being one of the top brands in the world with a brand that was created in India is a source of tremendous pride. We now want to make smart watches our second core and will rebuild the boAt digital strategy to become global leaders in this sector as well. The additional capital will enable us to dramatically increase our investments to disrupt the smartwatch markets with more cutting-edge technologies. We are also delighted that investors remain firmed convinced of and confident in the boAt narrative.â
Following this, Sameer Mehta, Co-Founder and Chief Product Officer said â
âThe majority of companies lack control over the end-to-end stack necessary to provide customers with attractive features because the market is still in its early phases of evolution. Great potential exists to develop the market and provide more innovative and cutting edge solutions. The next generation of devices is being developed by boAt laboratories, our 120-person internal R&D team and KaHa Technologies, a world class IoT and wearables platform with 64 pending and granted patents. These gadgets will give users more in-depth wellness information and extensive features enabling them to live healthier and more fulfilling lives.â
From their interviews, it is clear that boAt intends to do two main things with the cash infusion â
Attack the smartwatch market
Pay off its debts
boAtâs Marketing Strategy
The smartphone ecosystem in India has grown exponentially which has flooded the market with accessories like headphones and earphones with a big brand presence like Apple, JBL, Sony, Bose, etc. However, the Indian consumer is price sensitive and wants value for the amount spent. The accessories that these brands offer are expensive and Indian consumers are used to using earphones that came packaged with smartphones. Hence, the need to pay a premium price for audio accessories and purchase them separately was a problem. Also, Chinese products and second copies of well-known brands were freely available with street vendors and were cheap but lacked quality and durability.
boAt identified this gap and its target customer segment â the Millennials who looked for quality at a reasonable price. Recently boAt was listed as one of the worldâs top five brands in IDCâs wearables and hearables list along with names like Apple, Xiaomi, Huawei, Samsung, and Fitbit. 60% of boAtâs business comes from its headphones. Its sharp pricing makes the companyâs products aspirational and affordable.
Conclusion
boAtâs earphones have a special message for all its users as soon as it is turned on. It says â âYou are plugged into Nirvana.â The boAt company has skyrocketed its India and Global presence in a short space of time and managed to launch affordable, stylish, and excellent quality consumer electronic products.
FAQ’s
Who is the CEO of boAt?
Vivek Gambhir is the Chief Executive Officer of boAt.
Who invested in boAt IPO?
Current investor Warburg Pincus and a new investor Malabar invested USD 60 million in boAt IPO.
What is the reason behind boAt’s success?
The primary reason behind boAt’s increasing revenue and profitability is the growing demand for affordable and high-quality audio products in the country.
Who are the biggest competitors of boAt?
The top competitors of the Boat are Gonoise, Mivi, and Skullcandy.
Remember the tale of the tortoise and the hare; the lion and the mouse and the fox and the grapes?
Now think of how many times you have been told about any of these stories in your childhood or your whole life. Now think of the table of thirteen. 13Ă7=?
You probably remember and know about any one of these stories, even though you never tried to learn them by heart. However, you did try to learn the table of thirteen, and still might have some problem giving a direct answer to the question above. Anyway, the point here is that stories are more memorable as compared to the stats/ data that you tell a person.
Jerome Seymour Bruner, an American psychologist, in his book titled ‘Actual Minds, Possible Worlds’ estimated that facts are approximately 22 times more likely to be remembered if they are part of a story. Likewise, Researchers at The London School of Business found that people retain only 5% to 10% of information if it consists of statistics alone. But, when they hear a story, they remember 65% to 70%.
Imagine an inanimate object talking to you, convincing you to get or buy something from them. It is as bizarre as it sounds, but how often do we notice this? So if you are a business dealing with people or working with other businesses, make a mental note of this. Do not make the same mistake committed by many other companies. When thinking of an organization, no person likes to picture a pillar of a building or any other inanimate object persuading them.
Now, imagine a person telling you their story and why you should buy the item they are selling. What’s in it for you? Leaving you feeling inspired, happy or motivated towards what you just heard. The value it will deliver to you and how it can make your day-to-day tasks easier and better.
What scenario serves you better?
Of course the second one. It is imperative to communicate, to convey our messages. But the art of storytelling is not understood by everyone. People are more likely to be responsive when they see a face, feel connected, and know you better.
There are two types of thinking: left-brain thinking and right-brain thinking. Each side controls the corresponding side of your body. One leans towards analytical thinking and the other works with emotions.
Fun fact: Researchers have revealed that when taking a decision the response is more likely to be made based on emotional appeal.
Choices are based predominantly on the emotional side of the brain. And what brings out emotions like a well-written story?
Why do Brands use Mascots?
Amul Girl- famously known for humour
To add a human touch. E.g., take the Amul girl; you immediately link her to humour because of the stories told to you through her illustrations.
Amul Mascot – Kamala Harris
Throughout history, stories have been told in different ways on this planet. We as humans have been telling stories through visuals (in caves), with words (verbally), along the course until people came up with the idea of language giving birth to text. The shifting culture to print and the most recent addition to those in PowerPoint.
Advantages of Storytelling in Sales
It is a powerful tool that can help you connect adding an authentic touch to your brand.
Your brand stands out more effectively and differentiated.
Establishes your point of difference as a brand.
Gets the job of delivering your brand’s message.
Connects you with your customers.
The audience can recall your brand better and recognize it.
Before diving into storytelling in sales, you must know the basic elements of a story itself.
Five Elements of a Story
Exposition
This begins your story. Create a setting, a world, where your characters live, be it space, a jungle, or the contemporary world. Who are your characters? Who is the main character? What is the background of your characters that the audience would know about? What is the problem that the main character is facing? The conflict.
Rising action
Rising action drives the story forward. If there is a problem then it needs to be addressed; if nothing is done about it, your story can’t move forward. This is the part where the main character makes their move or performs any sort of action that will help solve the problem. This leads us to the next part, i.e. the climax.
Climax/The turning point
This is the turning point, during the climax; the emotions are on high alert. So you can take the lead of the story and decide what sort of choices your character makes that makes the audience on the edge of their seats. The challenges are thrown at the protagonists.
Falling action
As the climax, the action here is not as enthralling. Remember, you need to give your audience a break. You know, the story is close to its conclusion when the action falls. In either case, the falling action will have a part where the problem is solved or a completely new problem emerges for your protagonist.
The Resolution
Here comes the part of your story where it ends, and it all makes sense, all the questions are answered and the journey of character development is complete. There are two possible endings: a happy ending, or continuation, which would mean another part, but it’s entirely up to you. You control the narrative and you are the captain of the ship.
Communicating Strategically
Communication, if not done strategically, is a waste of effort.
Have a Goal
Talking without purpose or having a predetermined aim will get you nowhere. Know what you want to talk about, what is it that you want your audience to know? Do you want to inform them about something? Or make a connection? Identify the purpose of your story, be it in any form. It will help you get where you want to go.
Know your Audience
Maybe this does not sound as significant to you right now. But would you not agree if I told you that there is a difference between the way you speak to your kid vs the way you speak to your boss? The tone for the first example will be empathetic or strict, and you definitely would not use the word “AIDA” (Attention – Interest – Desire – Action) around your child, throwing jargon from the advertising world. Simply because they would not know the meaning of it in the first place.
On the other hand, while you are talking to your boss, your tone would sound more professional and you might use business-related terms like “creative brief” or “advertorial” if you work in an advertising agency.
Now you see how knowing your audience helps and the importance it holds when communicating with others. Teenagers will understand the slang while senior citizens won’t. Know your audience before you tell your story. Your message will be clear and delivered so that your audience perceives it exactly as you intend.
Answer the question “What’s in it for me?”
The purpose is what drives people to act. What is the importance of what you sell in their lives? The spark that differentiates you. Show them how you stand out. What is the unique value that your company is offering that no one else is? This also helps to establish common ground.
Give a Reason: why?
People don’t like to be told to do something unless you give them a reason. Why should they need what you are offering? Why should they buy it? So if they decide to purchase your products, what do they get? Why should they buy it? If you do not communicate the need, the communication barriers will remain unaddressed and your audience will get by using your product or service.
Tips to Guide you into the Process of Writing Storytelling in Sales
Clip from The Art of Business Storytelling by Ameen Haque
Use the correct medium: know what medium you are writing for the tone, and the length of the copy will depend on this.
Set a background theme and choose your characters.
Have a clear beginning, middle, and end.
Find common ground: make the situations and characters in your story relatable.
Use cliffhangers to create suspense or catch their attention.
Human touch is significant because it makes your advertisement feel more human.
Make sure you arouse these three hormones:
Dopamine: It is responsible for evoking feelings of elation and excitement. Make your audience more focused, attentive and creative as well.
Oxytocin: This induces feelings of lowering stress, making them more relaxed, and creating warm and fuzzy feelings. Which could result in making your audience trust you, more, bond with you and allow them to be more sharing with you.
Endorphins: Endorphins create feelings of well-being and euphoria.
Types of Storytelling in Sales
Agitate – problem – solve
Most businesses use these types of storytelling in Sales. Describe the problem and resolve it. Agitate- problem- solve. In this type of story, the organization begins by showing the problem that the consumer faces. And it is made known to the consumer that their pain is heard and seen. Invoking the emotion of empathy towards the customer. And finally, the problem is solved by showing how your product solves the customers’ issue.
Use Analogies, Similes and Metaphors
Using these poetic devices makes the stories creative in a good way. Use an analogy to explain your point. Explain the idea or the concept when comparing two things which are alike.
Metaphors are used more poetically, directly comparing two things. Whereas simile will use words like as and like to make comparisons. These help you cut through the noise and simply deliver your complex message.
E.g. “As well as normalize conversations about periods to the extent that it’s as normal as discussing last night’s dinner.”
One of the lines said by Anjali Suaran on the Main Hoon Yuvaa podcast makes us realize how much periods as a topic is still a taboo topic to talk about.
Consumers testimonials
Where do you turn if you need advice? To someone who has had experience in an area and has expertise. That is why we have experts, mentors and guides that we know will have the answers to our questions. People that you can trust. Building trust is not an easy job.
Customers hesitate before they try out your product or the service that your company is offering. This is where consumer testimonials come to your rescue and make a good fit for the storytelling tool.
By having customers who have already used your product and had their needs met, you will have added credibility and trust in your company. Sharing the story of your customers to resonate better and memorials
You as an organization
Building a personal connection, communicating your mission and vision, the achievements that you have accomplished so far, how are you playing your part in making this world a better place? What is your backstory? What are the obstacles that you might have overcome in the past while solving problems? Answer any other questions that your consumer might have about you as a brand creatively.
Be Repetitive and Eventually get back to the Ultimate point
Facts, a quote from someone who is looked up to, a phrase, or an idiom that is already accepted universally, can sometimes simply do the trick. If people already agree with what you are saying, they are more likely to listen to what you are going to say next.
Unfold the story with consistency. One cannot have a thrilling opening, a dull middle, and simply just the ending. It is important to balance all the elements of the story, starting with the exposition and ending with the climax. And eventually getting to the ultimate point of making the story come to a full circle.
Tell your Success story
A journey matters. Take them from point A to point B, from where you started and where you are right now. Success stories do not have to be limited to your organization; you can also get your employees to share their personal stories. Why they love working with your brand. Why do they do what they do? This will create a positive brand image in your audience’s mind, getting to know you, your people and the success stories.
Tips for Better Storytelling in Sales
The Do’s
Making consumers’ lives better.
Have a clear goal before speaking.
Keep it relevant to be impactful.
Keep it brief and short.
Sell more than just a product or a service.
Make them emotionally invested.
Remember that you are working with visuals so the show doesn’t tell.
Create an ending that makes them act.
Show how to solve the problem.
The Don’ts:
Do not tell your audience a long story, They will eventually lose interest in your story.
Do not speak without a goal or a purpose.
Do not spend too much time explaining the details unless it is really important.
Do not focus on you as an organization. Focus on the audience.
Do not offend your audience.
Do not give false information; it will negatively impact your image.
FAQ
How to use storytelling in marketing?
Tell the story of how you started your business, Share your customers’ stories, Share customer experiences on social media, and share stories of your employees or your company culture.
What is the 4P of storytelling?
The 4P of storytelling are People, Place, Plot, and Purpose.
How is storytelling used in sales?
Storytelling makes your prospects more meaningful stories humanize your selling.
If you are looking to start your own e-commerce business in India like Amazon or Flipkart, then this is the way to go. To start with, eCommerce is an online process of buying or selling goods and services. There is no paperwork involved in making any transaction here.
One of the best things that most of us like about an e-commerce startup is that we can update and modify it the way we want and make it attractive and appealing to the eyes of the audience. Your customer will have access to your services 24×7 and you donât need to come out of your door for marketing and other stuff if you are doing it at a small level.
According to a report, in 2019, eCommerce sales accounted for 14.1% of all retail sales worldwide. However, there are some things that you need to care about in your eCommerce business plan.
How to Start an eCommerce Business in India? (A 10-Step Business Plan)
Starting an eCommerce website might sound challenging, but with this easy 10-step business plan, it would hardly be tough. So, let’s dive into the steps:
Step 1: Define your business name
Business names are always important as they give you an identity after identifying what you want to sell. A business name will be the legal identity of your business. This opens a room for marketing your product with ease. The name that you choose should be simple and unique. It is always better to research extensively before you decide upon a particular name for your business. This will let you be safe and secure, and thus, is really important for everyone who would be starting an eCommerce website.
Step 2: Set a domain name
Ideally, there is always diversity in business. The business name acts as the domain name. A domain name system (DNS) stipulates the website address that your business wants to keep.
One of the important factors for an eCommerce business plan is awebsite. A website can be useful in developing different marketing strategies. It acts as a point of contact between you and your customers.
A website is accessible to many people at any given time and creates a climate of trust (credibility). Churning out a website is really convenient as it tells the customers that you exist. Furthermore, the website and the domain name are some of the core steps to proceed with before one can go about launching an eCommerce business.
Step 3: Identify the type of business and register
People engage with businesses as sole proprietorships, partnerships, or cooperation. Each of these has an advantage and disadvantage attached to it. For example, operating as a sole proprietor always subjects you to numerous risks.
You need to weigh before deciding upon a particular type of business that suits you. The income removal system (IRS) allows you to file the structure of your business on your own or get a different filing company to help you.
Step 4: Employer Identification Number (EIN)
You can not operate an e-commerce business without a bank account. To get a bank account you need for your business you need EIN. This number you are given acts as identification. You use it to file taxes for the business. It is always a requirement whether you will operate alone or employ people.
Step 5: Obtain legal documents
Every country has its own policies and procedures that every citizen must adhere to. This is also one of the things you must keep as a priority while creating an eCommerce business plan. If you fail to do that, the government has the mandate to declare your business illegal, after which numerous penalties might be imposed.
Licenses for the business and work permit should be obtained. Confirm with your state what type of taxes you are required to pay in order to operate. Also, you need to Apply for Goods and Service Tax (GST) certification and a Shops and Establishment Licence.
Step 6: Source for vendors
It is not possible to operate without vendors. Everyone needs to identify and keep in contact with different vendors. This way you can derive the best quality and prices for the materials you need to make your products. Conduct a thorough and serious search of the vendors to help you identify who you want to work with.
Step 7: Early marketing
Media platforms are paramount in e-commerce. However, it is also necessary that you have an eCommerce business plan prior to that. Alert customers that there is something good coming up so they can create interest to know. You can even decide to introduce blogging as a tool.
Step 8: Get effective software
E-commerce cannot work without making use of technology. Put every system in place before launching the product. Effective software is what you simply cannot compromise when it comes to building e-commerce websites in India.
Step 9: Keep a smart inventory
Inventory will help you track the information that you need. Ensure the warehouse (store) has enough products so that the customers donât miss out on what they want. You may not be in a position to tell what will be needed and when but is always safe to keep a decent stock. This will help keep track of the orders you make in the future.
Step 10: Be compliant
Always be smart with deadlines in terms of taxes, licenses and permits needed. Always ensure you abide by the law of the land. Staying compliant is the key to starting an eCommerce store or an online business and making it successful.
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How to Build an eCommerce Startup?
The Ecommerce industry is on the boom for the past few years, and why not? It is ultimately a sector with big opportunities and low barriers to entry. The total valuation of the e-commerce industry in India was last recorded at $46.2 million and is expected to rise to $188 billion by 2025. Such a sector that is ever so growing, certainly consists of a lot of opportunities.
Currently, there are hundreds of e-commerce sites selling products and services and thousands are on the way. Probably you also want to have one. Well, the e-commerce industry is so dynamic now, that you need to be agile and alert. So, keep monitoring the activities, events, discussions, and changes going on in your niche.
Now e-commerce is not about selling a product but a solution. Your potential customer must see the clear benefit of buying from you. Here are some tips to follow if you are starting up or already have an existing startup in the e-commerce domain.
Find a niche
If you get an idea for e-commerce, there is a fair chance that many startups are operating in that niche and many are coming up. That is why it is important to break the initial idea, segment them a little further or get a niche that is not explored yet and work on that with full focus.
If you think you can compete against Flipkart or Snapdeal that’s not going to happen if you plan to start with the same business model.
Take sandal. When the company launched, it was an online portal for deals and coupons. This was a very focused play. They didnât immediately start selling physical goods. Make your unique selling proposition, find your target “janta” or customers, and sell your product to them.
Experiment
As you have started out, the world seems very new to you. Nobody except you can tell what works best for you. So, experiment with different Pitches, Distribution channels, and more. Do this until you find out a solid sales strategy.
Listen to your customer
As it is always said worship customers like gods. Always remember that if there is any service you want to provide, then that should always be a customer satisfaction service. Your behaviour towards the customer after the sale would make all the difference.
This will help you in customer retention and thus make more sales. Once a sale is made. Talk to them, get feedback and see what changes they want. Even if it doesnât comply with want you want just change it.
Learn from the mistakes of competitors
Do you have lots of competitors? Having too many competitors is not so good news for businesses but every bad thing has got something good in it. So, if you have quite some competitors already in the same space where you would be starting your own eCommerce business, you can try to analyze their website design, pricing, and marketing strategies on a regular basis to get useful insights for future action. Go through their social media profile to see what activities have helped them gain traction a lot and what has failed for them. In this way, pick up all that they have done good, and try to avoid all the mistakes that they have done.
Use digital marketing
74% of adults who are online, use social networking sites, and among them, it has been found that 71% of online adults use Facebook. Being a startup you donât have much marketing budget. Here, starting with social media platforms for marketing purposes will indeed be of great help. Optimising the content and regularly sharing them on social platforms certainly is rewarding for brands and businesses. This will not only let you reach to large audience economically but also help you to get analytics to learn about the users. It is also a great way to listen to what customers are saying about your brand.
Number of social network users in India from 2015 to 2020
Operation
Make sure you always have enough inventory of the highest-selling product. Make sure that you keep a track of all the products that belong to the highest-selling and lowest-selling categories. Figure out what is making the highest product sell the highest and what makes the others the lowest-selling products. This will help you a great deal!
Looking at what similar companies are using. Add a mascot on the site that guides the users about the site and the products, is an interesting way to get the attention of customers (like Zendesk). Use only those plugins that are necessary.
Hire trained customer care executives to resolve customer queries over calls and emails. A toll-free number and support email is crucial too. Solve the problems that the customer is facing, to ensure the efficiency of the website.
Content marketing
The content is important for an e-commerce website and is good for marketing the brand. Putting up a blog or posts will surely bring up more traffic than ever. Content marketing will stand as one of the primary requisites as soon as you start an eCommerce store or an eCommerce website in India.
Social Media Marketing
Social media is the key to climbing the ladder and getting the exposure one wants in the public eye, so creating social media accounts is the key to helping the brand reach the eyes of the world. Keep the followers updated with new products and give ways to get more followers. Meme marketing is also a great way to engage your customers (Millennials).
Influencer’s utilization Â
The influencers are the best people in the game especially, in terms of product branding and making the future of a product. Hence, hire some influencers who are the best in the marketing game, which your brand focuses on, and pay them to put the ad on their social media. This will help increase your brand reach, thereby helping it to reach thousands and millions, who would then be able to see what your brand and its products are all about and people will pop up on the website for sure, giving you more website traffic and multiplying your revenues for sure.
How to Compete in the eCommerce Market?
Every day is new and brings changes in peopleâs needs and desires. Luckily, this is where small and upcoming startups can still win in the midst of other eCommerce giants. Here, is how to compete in the E-commerce market.
We are aware of how Amazon and eBay have driven many small and medium companies to extinction. But the other side of the reality is also that new interventions are always abundant and there’s always a new idea, product concept, or methodology that can topple the market leaders as we know them, or at least create a comfortably sweet spot in the market for themselves-which is just where your startup needs to reach.
If your startup is introducing a new product or service altogether, there is a very different approach you might need to take as compared to a start-up that is re-offering the existing product or service to bridge the demand-supply gap.
Be very clear as to who you are, what your offer is, and what your target is. Make sure that your core team and your entire organization have this understanding to ensure that the combined effort of the entire workforce maximizes the results.
It is a hopeful time to be as Amazon and the likes do cater everything to everyone. But the digital age has made it possible for everyone to co-exist as peopleâs tastes are ever-evolving and start-ups targeting the niche will be able to carve out their own space.
Read on for sage advice on how you can stand out in a crowded marketplace and reap the maximum benefit of being a newcomer to the industry.
Create Your Own Service
Your chance to be victorious in the game is to be an innovator and make your own market rather than depending on the existing marketplace. It is a harder approach to what you are already doing but will take you miles ahead of others.
See a Need, Fill a Need
We have seen time and again that certain brands launch big after years of testing and planning, however, once the brand is not received well they start to fizzle out. The ones who make it successfully are often seen using the feedback from the customers and dedicating some resources to perfecting common complaints and difficulties consumers are experiencing. They donât quit, rather, they use real-time data as the major source of what the next step is inspired.
In fact, building on what the customer conveyed as your shortcoming can also forge a trustworthy and loyal bond with them, which is a great way to market yourself. Instead of resisting the feedback, be open to them and make your way to their hearts by listening and acting on it. Create your own trend rather than following the norm.
Champion the Mobile App
Make sure that your customer is having a seamless mobile experience on your app and is likely to check out under 60 seconds after preparing the cart or choosing the service without any in-built interruptions. Fast times require faster solutions! In addition, make sure your startup belongs on platforms like Snapchat and Instagram that have made the visual world fun and directly accessible.
Design Thinking promotes that design is an elementary part of any system. Design your product, service, or systems within the organization always prioritizing the user needs and user practices.
Get inside not just the mind of the end-user, but also their daily lifestyle, their influences, their dreams and aspirations, their environment, and their culture, depending on the nature of your services.
Customer is more likely to trust your brand if they think you thought of them specifically while making the product or service. This gives them confidence that you will understand them and will stand as a good choice for them.
Better Incentive Programs
Your incentives can come in the form of discounts, rebates, points earned toward a discount, points earned toward prizes, or any of many other plans. The worst-designed incentive plans have ambiguity in the stated rules.
An incentive is likely to shape your customerâs behaviour and drive them to your desired action. These incentives are thus, really valuable for an eCommerce company, especially if you are wanting to start an online store in India. If they are rewarded for their purchase, they feel like they âearnedâ it. Keep a close eye on what other e-commerce companies in India are offering and if you are to compete with them, you must outdo their offer every time.
Better Customer Service
A common Amazon trait that has made it wildly popular in the e-commerce service is how they value each customer. Similarly, if you also want to start an eCommerce business, then you must first start to value each and every customer the same. While you canât crush e-commerce giants given that they have bigger marketing budgets and bigger control of their product lines, operations and sales, it is certainly a trait you can imbibe in your company. Each satisfied customer means five people who will hear about you from him, which is great marketing for you at no actual cost.
Customer Data Is The Key to Ultimate Business Growth
A former Amazon company worker stated that Amazon has the ability to track both what people are buying as well as what they search for and canât find.
This is a part of their success story. Companies that use customer data to better their practices are more likely to increase their sales and their gross margins than those who ignore the data.
Even if you donât have big budgets to acquire data like e-com giants, do make absolute use of the behavioural data you already have in their database to improve customer satisfaction and customer retention.
How do eCommerce Sites Make Money?
Everyone wants an extra income to meet their needs and upkeep their standard of living. Furthermore, buying and selling goods and services via the Internet is the new trend to earn money, and the websites that make them possible are none other than Ecommerce websites. The Ecommerce websites are offering a free platform for the sellers and the buyers to get in touch with each other.
One can easily list their products on e-commerce websites and potential buyers can buy the products hassle-free sitting in any part of the world. The whole online buying and selling chain appears to be a very easy and economical process.
Although, you must have wondered as they offer free services to sellers and buyers thenhow these e-commerce websites like OLX, Quikr, Craigslist, and Gumtree make money online.
E-commerce websites, such as OLX, Quikr, and other leading sites provide an online portal to advertise your product or service offerings and find the buyer for them.
Almost all emerging e-commerce websites offer free services to users. However, they still make high-tech TV commercials and disburse lucrative salaries to their employees. How? So, letâs get the answer by analyzing the revenue-generating strategies of a few leading e-commerce websites and comparing their revenue plan with others.
Olx
OLX is one of the most popular and well-structured e-commerce websites. It offers a variety of features to its users, such as sellers can directly chat with a buyer, can easily bargain, etc. eBay is one of its competitors of OLX. OLX opts for the following methods to earn money:
Google AdSense Banner Ads
Google offers to all bloggers and website owners a very easy platform to get advertisements on their sites. Google AdSense is a platform where you can register your website and after verification, Google will show related advertisements. Hence, OLX Â effectively runs Google ads to reach its target audience. The earnings through ads depend, upon the number of clicks they get which is called CPC (cost per click model).
Featured Listing
OLX offers a featured listing option to the sellers. Featured links are those links that you see on the top, whereas, in a normal listing Ads are placed in OLX depending on how recently the Ad has been placed.
Featured Ads will always appear on top of the list irrespective of any factors. Ideally all such should be mentioned as featured/sponsored/ads so that users donât get an illusion. In a featured listing, your ad will show up at the top of the search list and your ad will be shown first to the buyers whenever they search for anything on OLX. The sponsored links appear depending on the keywords targeted by the advertisers. Being at the top of the list gives advertisers a way to get more leads.
Quikr
Quikr is yet another e-commerce, which is very popular in India and somehow looks and works similarly to OLX. While the featured listing is one way to make money Quikr also follows a different route here.
They also generate revenue by generating leads for businesses. It makes a gainful amount of money for Quikr. Recently Quikr has acquired a few startups to diversify in different fields like Jobs, spas, and salons where they provide leads to these service providers.
Craigslist
Craigslist is also a popular rental listing website. It is mainly popular in the USA. But the company doesnât earn as much revenue when compared to other websites. The company only makes revenue equal to its operation charges.
It charges $10 for a rental listing in New York and $25 for a job listing to occur in any of the major U.S. cities. If in the San Francisco area, you need to pay a $75 fee for a job to be listed.
The company is trying to consider Google AdSense and paid advertisements to generate more revenue, but it is still worried about the quality and clutter on the website due to ads, which is the main priority of the company.
There are other similar eCommerce websites present, like Gumtree and BookSellBuy. They also earn through a basic business model, that is, by providing premium membership Ads wherein the features depend on their own model, by featured ads and paid listings. So, almost every website uses paid ads to generate money.
Conclusion
Now, building an eCommerce website is the trend. It definitely takes a lot of effort and hard work, but once created and branded properly, it will surely open a whole lot of doors for growth. It is not an easy task to run an e-commerce business in India in the current age of competition. Starting an eCommerce company or an eCommerce business in India is certainly achievable if one has the focus and grit to understand the customer and the people who are in the organization.
Use your data efficiently and always make the customers happy at the end of each transaction. Comment on your favourite e-commerce site or your story of launching your own e-commerce site in the comment down below.
FAQs
What are the 3 types of e-commerce?
The three types of Ecommerce are Business-to-Business (B2B), Business-to-Consumer (B2C), and Mobile Commerce (M-Commerce).
What is the future of e-commerce?
The eCommerce industry was last valued at $46.2 bn in 2020 and is expected to rise to $188 billion by 2025, and would soar to become $350 billion by 2030.
Which is the largest e-commerce company in the world?
Amazon is the largest e-commerce company in the world.
How much does it cost to start an e-commerce business in India?
To start an e-commerce business in India you need approximately at least 5 – 10 lacs of investment.
How to start an eCommerce website, store, or eCommerce business?
Whether you want to start an eCommerce store/site or an eCommerce business, it is evident that you first need to research the industry and the market potential before starting up. Starting an eCommerce company in India would need you to:
Build a fast, comprehensive, and informative website
Create a viable business and revenue model
Decide a relevant domain name
Host the website properly
Market your website, its products, and services
Monitor the performance
What are some of the eCommerce business ideas?
Some of the best ideas if you want to create an eCommerce website or an eCommerce business in India would include grocery delivery, cosmetic and beauty products eCommerce business, refurbished or second-hand products business, fashion, jewellery, food tech and more.
What are some things that you should never forget while trying to set up an eCommerce business in India?
Setting up an eCommerce business in India is the dream of many, but only some eCommerce businesses in India actually see the light of day. Here are some of the easiest steps that you need to remember while setting up an eCommerce company in India:
Chalking out a workable business and revenue model
Branding your brand well
Registering the business
Opening a bank account and linking the business to the same
Creating and launching a simple but secure eCommerce website
Alan Joseph
