Market Watch
- Indian benchmark indices ended in the red, with the Sensex down 413 points at 61,932, and Nifty down 112 points at 18,286.
- Sectorally, Nifty Media (-1.38) and Auto (0.93%) shed the most, while PSU Bank (0.72%) and IT (0.18%) gained the most.
Cred looks to break even with $350-mn run rate, cost cuts
Cred’s income more than doubled in FY23 and the Bengaluru-based fintech unicorn is aiming to break even in FY24 with a revenue run rate of $350-380 million.
Why this matters: Cred is finally approaching breakeven after being criticised in recent years for its multiplying losses and failure to show revenue streams.
- The unicorn was valued at $6.3 billion in its last funding round in June 2022, and Shah is seeking to rationalise operations so that Cred can hit its desired valuation in its next fundraise.
The details: Cred’s revenue streams include bill and rent payments, e-commerce purchases, and lending and investment services — which have become a crucial area over the past year as it enjoys the biggest margins.
- At the same time, the company is examining all its other operations for cost-cutting opportunities in a strategy shift, as it previously never prioritised businesses.
- With Cred’s growth strategy pivoting away from aggressive marketing and expansion, it has curbed cash burn from $15-20 million per month in 2021 to about $5 million now.
- It slashed marketing costs — its biggest expense — from Rs 973 in FY22, and has also cut its second-largest cost centre of employee expenses, as well as reducing spending on technology infrastructure.
- Its customer acquisition costs have also decreased with the expansion of use cases, including bill payments, e-commerce, and peer-to-peer payments.
What else: Cred recently executed significant layoffs of 10-15% of the employees at Happay, the corporate-expense management platform it acquired for $180 million in 2021.
- While Happay offers prepaid and credit cards for corporates to give their employees, Cred wanted to introduce a prepaid payment instrument option as well, but this was abandoned due to RBI regulations introduced last year.
- Happay has thus far operated as a separate unit, but Cred founder Kunal Shah is currently working on significantly restructuring and integrating its operations and developing plans for it to launch a product for small businesses.
Shopping from Amazon may get costlier as platform hikes seller commission
In a move that could potentially lead to increased prices for customers, Amazon has raised the commissions and fees it charges sellers across multiple categories.
Why this matters: The increased commissions and fees will most likely lead to higher prices for the consumer, as sellers generally pass on these costs to the customers.
The details: Amazon has hiked the seller fee in categories like electronics, beauty, apparel, eyewear, pharmaceuticals, home, and pets.
- However, it has also reduced rates for certain categories, such as wall paints, tools, inverters, and batteries, and simplified the commission structure for other categories, like makeup.
- The fee revisions, effective from May 31, 2023, also include changes to referral fees, long-term storage fees, refunds related to returns, and fulfilled-by-Amazon (FBA) pickup fees.
- The company has also increased shipping rates by about 20-23% for products that need to be shipped nationally.
- See the detailed breakdown of the new fees on YourStory.
The big picture: E-commerce companies generate revenue by charging commissions and fees from sellers for products sold through their platforms.
- Amazon hiking its fees reflects the downturn in the tech sector that has seen many giants undertaking layoffs and seeking to cut costs, amid a global consumption slowdown brought on by macroeconomic headwinds.
ICYMI
- Union Minister for Road and Transport, Nitin Gadkari, received a death threat via a phone call at his Delhi residence and investigations are now underway.
- Meta has introduced a 'Chat Lock' feature on WhatsApp, enabling users to secure specific chats with a password or biometric authentication
- A drunk patient attacked a house surgeon in Kerala’s Ernakulam district in the second such shocking incident in under one week.
- Malaysia will introduce a law decriminalising the possession and use of small quantities of illicit drugs to reduce prison overcrowding.
- The Municipal Corporation of Delhi (MCD) is planning to establish ‘pink parks’, exclusively for women, in all 250 municipal wards under its jurisdiction.
- Sudha Murty, renowned author, philanthropist, and mother-in-law to the UK Prime Minister, recently recounted an incident where an immigration officer didn't believe her London residential address to be '10 Downing Street'.
- Mumbai, Bengaluru, and New Delhi saw a significant rise in the average annual prices of prime residential properties in the first quarter of 2023, boosting their rankings in the Prime Global Cities Index (PGCI).
- Three minor boys aged 11, 14, and 16, were detained in Madhya Pradesh’s Seoni on Sunday for allegedly murdering their 12-year-old friend.
