e-Conomy India 2023

Hello, fellow Olio enthusiasts! 👋

Happy Hump Day and welcome to the 32nd edition of Weekly Olio - your weekly dose of giggles, wisdom, and a sprinkle of intrigue with our tantalizing thought piece (yes, we're talking about Publisher's Parmesan here). 🤭

A big shoutout to all of you for the fantastic support and feedback. Let's keep the momentum going in the days and weeks ahead! 😊

Today’s Publisher’s Parmesan talks about a far-reaching report that analyzes India’s digital economy from multiple angles — consumer, business, and infrastructure — and across key sectors such as e-commerce, finance, education, and healthcare.

The report provides insights and strategies for building on the growth momentum that is already playing out across India, from the digital boom in Tier 2+ cities to the startup ecosystem that ranks third in the world and the adoption of the India Stack.

Exciting, right? 👏

Will come to that, but let’s first start with the curation.

Oh, and before you continue, it's time for some sponsor spotlight! Don't worry, it's not clickbait, it's just our way of 'feeling the ad-vantage'. So, do click, and help us keep the lights on and the puns rolling! 😀

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The Quote󠀢 💭

The Tweet 🐦

In 2021, Axie Infinity has feted the world over - it even helped generate employment and income for the citizen of the Philippines. It was thought to be the arrival of a new form of gaming - where the players are paid to play the game powered by crypto.

Sadly, this very feature of Axie Infinity was weaponised by hackers from North Korea to siphon off hundreds of millions of dollars —a fascinating story of an international money heist. 🕵️‍♂️

The Infographic 💹

The Economist’s latest liveability index shows that cities all across the world have fully recovered from the havoc caused by CoVID. While Asian cities have rebounded the most, European cities continue to dominate the top 10. Interestingly, no American city is liveable enough to make it to the top 10 - New York finds a place at number 69.

The Short Read 📝

What Warren Buffett is buying in Japan’s Berkshire Hathaway look-alikes - by CNBC

Warren Buffet has been buying shares in Japan's five largest trading houses, known as sogo shosha since August 2020. According to a recent interview, his stake in each of these trading companies has risen to about 7.4%. These companies are similar to Berkshire Hathaway in that they have diversified portfolios and focus on value and cash flow.

There are several reasons why Buffett is interested in Japan's trading houses. First, they have a long history of success. These companies have been around for centuries and have survived through wars, economic recessions, and natural disasters. Second, they have a strong track record of generating cash flow. This is important to Buffett, who believes that a company's ability to generate cash flow is a key indicator of its long-term value. Finally, trading houses are relatively cheap. Buffett believes that the market is undervaluing these companies. He sees this as an opportunity to buy shares at a bargain price.

It is too early to say whether Buffett's investment in Japan's trading houses will be successful. However, the companies have a number of attractive qualities that could make them good long-term investments. Only time will tell whether Buffett's bet on Japan will pay off.

The Long Read 📜

Pricing Power - by Oliver Sung

With consumer price inflation rearing its ugly head in the last 12 months, fundamental values such as pricing power to evaluate businesses are back in vogue. Traditionally, pricing power is defined as a company’s ability to raise prices without losing customers. However, in inflationary times, simple definitions like this may not be enough. This piece dives deep into the topic of pricing power breaking it down into its constituents.

Using the value stick framework, pricing power is not limited to the ability to increase prices. It could also manifest in mechanisms to reduce cost, to increase the customer’s willingness to pay or to reduce the cost of production for vendors/suppliers. Once you evaluate businesses with this framework, multiple levers to exercise pricing power are unlocked. A number of factors can provide pricing power to a company: strong brands, economies of scale, patents and network effects. While it is easy to raise prices once, sustaining pricing power over long periods of time is very difficult - hence, the number of companies with true pricing power is very small.

Some examples of companies with true pricing power include Apple and Google. These companies have been able to achieve pricing power using a combination of brand building, economies of scale and developing strong intellectual property. Must read for anyone looking to understand economic moats and pricing power.

This week’s Publisher Parmesan is sponsored by Revolut.

Banks will charge you when you spend or transfer money abroad. We’re not about that, and that’s why over four million people have switched to Revolut.

Publisher’s Parmesan 🧀

e-Conomy India 2023

India e-Conomy Report is a research report jointly developed by Google, Bain & Company and Temasek.

The report reveals that India’s consumer internet economy is expected to reach US$1 trillion by 2030 because of a positive shift in consumer and merchant behaviour, matched with strong investor confidence. The below text covers some of the major talking points. Feel free to access the full report here.

India's internet economy is on a wild ride…

…sprinting towards the trillion-dollar mark like Usain Bolt on caffeine. With consumers and merchants changing their habits faster than a chameleon on a disco floor, India has officially entered its 'Digital Decade' and is zooming towards a $1T consumer internet economy by 2030. It's like watching a Bollywood blockbuster with a plot twist that no one saw coming!

In this digital revolution, even elephants are learning to swipe right, as India's 700M+ internet users embrace digital services like they're the latest fashion trend. With 350M digital payment users and 220M online shoppers, the internet has become the lifeline of the nation, weaving its digital magic into the very fabric of everyday Indian life.

As India gears up for an explosive boom that would make fireworks jealous, household consumption is set to double by 2030. It's as if the entire country is going on a shopping spree, with digital commerce becoming the oxygen Indians need to survive. Move over, traditional brick-and-mortar stores; digital shopping is the new must-have accessory for every Indian, and it's here to stay.

The internet sectors are on an upward trajectory…

…soaring like rockets on a mission to conquer the digital universe. B2C e-commerce, the superstar of the show, is already flexing its muscles and contributing a whopping one-third of the internet economy's value. As if that's not impressive enough, this digital shopping extravaganza is expected to skyrocket six times its current size, reaching a mind-boggling $380B by 2030. It's like witnessing a retail revolution that puts shopaholics to shame!

But wait, there's more! The online travel and ride-hailing sectors are also gearing up for an epic journey, projected to follow similar explosive growth paths. Buckle up, because these industries are expected to scale at least 4-5 times over the next decade. It's like a roller coaster ride where every twist and turn brings new heights of success.

And let's not forget about the financial superheroes of the digital realm. With consumers and merchants embracing digital tools and solutions with open arms, the digital financial services sector is poised for phenomenal growth. From payments to lending, investments to insurance, these digital warriors can expect a promising growth range of 8%-13% CAGR between 2022 and 2030. It's like watching a financial revolution unfold, where every digital transaction is a victory for progress.

But hold on tight, because the excitement doesn't stop there! Inspired by the success stories of SaaS, Edtech, and B2B e-commerce, Indian businesses are setting their sights on global conquest. With a talented and creative workforce, lessons learned from the domestic market, and regulatory support that's more proactive than a superhero on caffeine, the doors to global exports are swinging wide open. It's time for Indian businesses to spread their wings and show the world what they're made of. Get ready, global market, because India is coming for you, armed with innovation and ambition!

Digital infrastructure in India is on a sprint…

…racing ahead with the support of a robust policy push. The India Stack, a revolutionary framework, has played a pivotal role in making essential public goods and services accessible to both citizens and businesses through digital platforms. It's like a superhero team-up, with services like Aadhar, United Payments Interface (UPI), and Digilocker joining forces to unlock the vast potential of India's internet economy. These services have laid the groundwork for disruptive open networks such as the Open Network for Digital Commerce (ONDC), Open Credit Enablement Network (OCEN), and Unified Health Interface (UHI), which are eagerly waiting for their moment to shine.

Just like a well-coordinated relay race, these digital platforms have passed the baton to the next generation of innovation, creating new opportunities for both existing and emerging sectors. It's like witnessing the birth of a digital revolution, where traditional barriers are breaking down, and the sky's the limit. The ONDC, OCEN, and UHI are poised to disrupt the status quo and redefine the rules of the game. They're the trailblazers, waiting for the perfect moment to unleash their full potential and transform entire industries.

With such a strong foundation and a supportive policy environment, India's digital infrastructure is sprinting towards a future where accessibility, efficiency, and innovation go hand in hand. The stage is set, and the anticipation is palpable. Get ready for the fireworks, because when the inflection point arrives, the impact will be nothing short of spectacular.

Investors are strutting their stuff with confidence…

…undeterred by the challenges that lie ahead. India's strong growth fundamentals, coupled with successful exits and supportive regulations, have ignited a global capital frenzy since 2016. It's like a magnet, attracting an abundance of investment and propelling India to the prestigious #3 spot in the world when it comes to the total number of unicorns. The digital sectors, in particular, have become the darlings of both local and international investors, capturing a significant slice of the investment pie.

Sure, there may have been a slight dip in funding activity in 2022 compared to the previous year, thanks to some macroeconomic softness and sky-high pricing expectations. But fear not, for investors are optimistic and expect a swift recovery, with funding levels bouncing back to the peak of 2021 by 2024. It's like a speed bump on the road to success, but the journey is far from over.

Looking ahead, the long-term outlook for investors in India remains bright and promising. It's like gazing into a crystal ball and seeing a future filled with potential and opportunity. Despite the challenges that may come their way, investors are standing tall, ready to seize the possibilities that India has to offer. With unwavering faith in India's growth story, these investors are confident that the rewards will outweigh the risks. So, let the adventure continue, because, in the world of investment, India is a destination that beckons with promise.

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Peeyush and Mohit

Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.