ETtech Top 5: Amazon’s Prime Day sale in India, Ant Group IPO & more

Amazon is kickstarting its biggest shopping event from India while Alibaba’s fintech affiliate Ant Group is finally gearing up for its much-anticipated public market debut.

Amazon Prime Day Sale

India will be the first market for Amazon’s flagship shopping event ‘Prime Day’ this year, as it looks to revive consumer spending ahead of the festive season.

The event which was typically held simultaneously across all its markets in mid-July, will be conducted on different dates in other markets this year. The e-commerce giant has also postponed the event in its home market United States to a later undisclosed date

Why is this important?

This event will provide Amazon the opportunity to make up for the lost sales during the lockdown and also give sellers a chance to offload inventory at a time when ecommerce is increasingly becoming the primary choice for product purchases as people stay indoors due to lockdown curbs.

Ecommerce firms have recovered almost 80-90% of their volumes compared to pre-Covid-19 levels, largely on the back of electronics items like laptops and tablets.

The sale is also timed close to festivals like Rakshabandhan, Janmashtami, and Independence Day which is likely to spur consumption. Read more.

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TikTok‘s troubles

After India banned TikTok last month, troubles for the ByteDance-owned short video platform are piling up across the world.

Pakistan’s telecom regulator has issued a final warning to TikTok over “immoral” content on the platform, while the Australian government is reportedly investigating the short video platform over concerns of potential foreign interference and data privacy issues.

TikTok is also facing a potential ban in the United States amid fears of the app’s handling of user data and increasing tensions between the United States and China.

These moves come as TikTok looks to distance itself from its Chinese roots and is even considering changes to its corporate structure apart from moving its headquarters out of China. The TikTok app has clocked 2 billion downloads across the world, according to Sensor Tower, with India being the biggest market, prior to its ban last month.

What are they doing?

In a possible bid to appease the US government, TikTok told Axios that it plans to add 10,000 jobs across areas like engineering, sales, content moderation and customer service in the United States in the next three years. The company had earlier roped in Disney’s streaming chief Kevin Mayer as its chief executive.

Meanwhile, ByteDance is spending record money on federal lobbying to fight government allegations, as per lobbying disclosures filed with U.S. Congress. It spent $500,000 in the April-June quarter, as compared to $300,000 in the January-March quarter.

Ant Group IPO

Alibaba’s fintech affiliate Ant Group (previously Ant Financial) has kicked off one of the world’s most anticipated public offerings by starting the process of a dual listing in Hong Kong and on Shanghai’s Nasdaq-like stock exchange Star Market. It will be the first company to list on both the exchanges.

Ant Group, which was spun off from Alibaba in 2011, is seeking a valuation of $200 billion from its public offering. The company was last valued at $150 billion when it raised a massive $14 billion financing in 2018. Alibaba founder Jack Ma still owns a controlling stake in the company.

The financial services and payments giant is known for its mobile payment platform Alipay but has been expanding to other products like wealth management, loans, and third-party insurance among others.

India bets

Over the years, Ant Group has placed significant bets on the Indian internet ecosystem. It is currently the largest shareholder in startup unicorns like digital payments player Paytm and food delivery platform Zomato.

Struggle of fintech lenders

Fintech lenders are struggling to raise low-cost debt, even as demand for credit is gradually reviving. This is because banks have increased risk premiums due to stress on their books amid Covid-19 pandemic and a lack of clarity over whether a moratorium on loans would be extended.

What’s the issue?

For most fintech companies, term loans from banks and equity capital from investors are the two major sources of capital. However, the pandemic-induced lockdown has impacted both these avenues.

Loan disbursements under co-lending partnerships, where the risk is shared between banks and non-banks, have also slowed in the unsecured personal loan as well as small business loan categories, industry players said.

“The deals which were happening at 13% in March have gone up to 15%; some deals are also happening at 17%,” the chief executive of a consumer lending fintech told ET.

Fintech companies may not be able to pass the increased borrowing costs to customers, since they may lose out to bigger non-banks and banks offering low-cost or no-cost equated monthly instalment products. Read more.

Zoom’s India investment

Video conferencing app Zoom is expanding its India presence with a new technology centre in Bengaluru that will hire key talent over the next few years. The company currently has an office in Mumbai, apart from two data centres in Mumbai and Hyderabad.

What’s the plan?

Zoom said that this expansion will supplement the company’s existing R&D centres and support its engineering leadership, based at its San Jose, California headquarters.

The company had earlier stated plans for a significant investment in India after witnessing increased adoption for the service in the country. Zoom claimed that it witnessed a 6,700% growth in free user sign-ups in India from January to April this year.

The move comes at a time when the market has witnessed the entry of a new powerful local player in the form of Reliance Jio’s JioMeet, which interestingly bears a striking resemblance to Zoom’s app interface. Read more.

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(Illustrations and graphics by Rahul Awasthi)