Monday, November 30, 2015

Wallet Recession: The Global Recession Reaching Ghanaian Pockets

If it feels like you are reading about Global Recession in this booming times, it is simply because the writer of this post is Ghanaian in the year of economic-dumsor.
As much as I try to find a suitable explanation for this issue, is my desire not to underestimate the personal economic slowdown among young adults in Ghana and probably Africa as a whole.  
If you are below the age of 40, your genuine answers to these questions would help you understand the State of your Wallet Affairs, that is whether you would be classified among the Wallet Recession Class or not…. What is your Net worth / Net economic position? (Let me help you here, It also called Wealth – which is your total assets minus total liabilities).  How much do you owe? When was the last time you gave a tip? How many  are sources of income do you have? Who depends on you?
The wallet recession is where there is a significant decline in 'economic activity' in your wallet (or  pocket, bank account or mobile money account).
The major economic indicators such as investment spending, giving tips, buying a drink for a friend, paying the taxi fare, lending to friends are drastically falling, whiles borrowing from parents, institutions, and well-off friends (Pastors' kids) are on the ascendancy. 
What is really happening? Most young people in this generation are quick to go for students loans and those that are not lucky spend the rest of their lives buried in debt trying to pay them whiles life hits them left and right. 
Why are our wallets slimming down so fast? I was trying to assure myself that people may be using debit cards or holding their monies in investments but the facts do not support my theory.
Too much unnecessary spending just like the Government of Ghana without  equally proportionate earnings to support it. 
If you think this is a just Ghanaian or African problem, think again. As my good friend and legendary investor Carl Icahn warns, there is going to be a bloodbath in the stock markets, and the great recession in America would be back. Start preparing before the dumsormic recession comes.

Thursday, November 19, 2015

The Dotcom Smart Model: A look at Groupon

Until today, I never understood Groupon's Business Model. I wonder how investors in Groupon are feeling. How could this business model work in the long run when mostly only price-sensitive customers show up on the doors of merchants who sign up on to Groupon deals.
One thing I have learned from today's E-commerce business models is that, they start, create the buzz needed to attract investors, list on the stock exchange, Founder gets listed in the Forbes 400 billionaires list and then the company is left to rot in the hands of market forces.
Smart ones then adopt the "holding company / investment management model" - buying new businesses in different sectors and hoping to make enough return on investments to pay shareholders. Most of which do not succeed in that.
When Groupon listed in 2011, it had more than 83 million customers operating in about 43 countries. In that  same year Groupon lost $254 million on a $1.6 billion in revenue. Wheeew!!
I hope the companies Groupon purchased are helping. In my small country Ghana, I'm yet to know of any merchants on the Groupon deal.
Is the future bright for the sake of untapped markets (like Africa) or for the sake of the model?
Truly, everyone likes cheap things especially when the price is sliced into two. But who would like it when the prices go back to normal? If I'm the merchant, customer acquisition alone is not what I'll desire. I know people's taste can change and even to the most loyal customers, price still matters. 

The e-commerce revolution is still unfolding and we are all hoping to tap into the smart model. If you get burned or turn into millionaire, Naija man will say, "na waa for you ooo". 


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