aleisha-lee

Why Japan Is About To Reshape Global Liquidity — And What It Means For Stocks, Bonds And Crypto

Sat, 25 Apr 2026 05:25:00 GMT

Aleisha Lee, CPA, Licensed RE Agent (Queensland)

25 April 2026 < 7 minutes read

The Bank of Japan (BOJ) is actively transitioning away from decades of ultra-loose monetary policy, and the ripple effects are already being felt across global financial markets. As of December 2025, the BOJ raised its key short-term policy rate to 0.75%, the highest level since 1995, marking a decisive break from the near-zero rate environment that defined Japanese monetary policy for a generation.

This policy shift matters far beyond Japan's borders. For over three decades, Japan served as the world's primary source of "cheap money" through what markets call the Yen Carry Trade — a mechanism where traders and institutions borrow yen at near-zero cost and rotate that capital into higher-yielding assets globally, from US tech stocks and government bonds to emerging markets and crypto. As the BOJ raises rates, the cost of borrowing yen rises, the yen strengthens, and those trades begin to unwind — creating a significant liquidity headwind for risk assets worldwide as capital is pulled back to repay yen-denominated loans.

Next week's BOJ meeting on April 27-28 was widely expected to deliver the next rate hike to 1%. However the BOJ has now solidified plans to hold steady at 0.75%, delaying the move to June 2026 as Middle East tensions drive crude oil prices higher — simultaneously fuelling forced-spending inflation while threatening economic growth, a difficult combination for any central bank to navigate.

The 1% hike is not a question of if — only when. And when it arrives, Japan will be operating at its highest interest rate in nearly three decades, dismantling the cheap liquidity conditions that global markets have quietly relied on for years. The carry trade unwind that follows won't just be a Japan story. It will be felt in global stocks, bonds, property and crypto simultaneously.

Source: Bitcoin.com News

Japan - the world's ATM
Think of it like this: Japan has been the world's ATM for three decades. Traders and institutions borrow yen cheaply, convert it to dollars, and pour it into US stocks, bonds, real estate, crypto — anything with a better return than near-zero Japanese rates. It's been the single largest source of cheap global liquidity for a generation.

According to data published by Fortune Magazine , Japan holds approximately $1.2 trillion worth of US Treasuries alone. Japanese banks and institutions also invest heavily in global bonds, stocks, and other risk assets, making Japan a key source of global liquidity.

When Japan raises rates — that ATM starts charging fees. And the whole world pays!

Source: Bloomberg

What Happens When The Yen Carry Trade Unwinds

When Japanese rates rise, the maths of the carry trade breaks down fast and the following two events happen simultaneously.

Borrowing yen becomes more expensive, meaning higher repayments.
The yen strengthens, meaning currency losses.

The result is often a forced, cascading unwinding of trillions in positions across every asset class on earth. Yen rate hikes mean the global liquidity tap is closing, pressuring global asset prices dependent on cheap funding. We've already seen this move played out in preview. Bitcoin fell nearly 3% shortly after the Bank of Japan raised rates to 0.75% in January 2026 — showing how quickly markets react when global liquidity conditions change. That was just a 0.25% hike. The next move takes Japan to a rate level not seen since the 1990s. This is exactly why carry trade unwinding can trigger severe global market volatility.

Source: Reuters

Impact on Global Stock Markets

US technology stocks have been among the primary beneficiaries of cheap yen-funded liquidity for years — and when carry trades unwind, institutions are forced to sell their highest-performing, most liquid positions first, meaning US tech leads any selloff.

In August 2024, a surprise BOJ rate hike triggered one of the sharpest single-week market moves in recent memory — the Nikkei dropped over 12%, the S&P 500 fell sharply, and volatility spiked globally as carry trade positions unwound faster than markets could absorb.

As Japanese rates rise toward 1%, the incentive for Japanese institutional players — life insurers, pension funds and banks — to bring capital home increases significantly, fundamentally restructuring global capital flows.

Source: CoinPedia

Impact on Bond Markets

Japan already carries the world's highest debt-to-GDP ratio at almost 230%, and with Japanese Government Bond yields hitting multi-decade highs, the fiscal strain of rising rates is building rapidly. As domestic yields become more attractive, Japanese institutional players — the world's largest holders of foreign bonds — have increasing incentive to sell US Treasuries and repatriate capital, putting upward pressure on US Treasury yields and tightening credit conditions globally.

The flow-on effect touches everyone. Rising US Treasury yields push up mortgage rates, corporate borrowing costs and government debt servicing expenses worldwide. In plain English — when Japan raises rates, it becomes more expensive for governments, businesses and everyday consumers everywhere to borrow money.

Source: Bitcoin.com

Impact on Crypto

Bank of America warns that tighter policy in Japan may reduce global liquidity and trigger another sharp Bitcoin sell-off. If BOJ raises rates toward 1%, analysts warn Bitcoin could face a possible 4% to 5% decline, which may push Bitcoin closer to the next level of support at around $60,000.

The mechanism is straightforward:

BOJ hikes to 1% → yen strengthens
Carry traders unwind → sell foreign assets to repay yen loans
Global liquidity contracts → risk appetite collapses
Bitcoin and Altcoins, which trade as risk assets not safe havens, get sold alongside tech stocks
Ethereum, Solana and smaller Altcoins → which carry more risk → amplified face-melting losses

Historical data shows yen rate hikes has a negative correlation with Bitcoin and broader crypto assets . Liquidity tightening suppresses risk asset prices broadly. This reinforces one of my earlier blog posts that Bitcoin is not digital gold . When macro fear spikes, BTC sells off with equities. The BOJ hike is precisely the kind of macro event that exposes that vulnerability.

Source: ByBit

The Silver Lining - it may be a "slow leak, not a dam breaking"

It is worth to note that even at 1%, Japan's rates remain dramatically lower than the US, Europe and Australia. The yield gap doesn't disappear overnight, it just narrows.

As I noted at the time of writing, with Japan at 0.75% versus the US at 3.75%, the differential may still be wide enough to keep carry trades attractive and discourage mass unwinding . Some analysts argue most yen carry trades have already been closed out following the 2024 unwind scare, suggesting the market has partially priced in the BOJ's interest rate direction . Under this view, any liquidity shock would likely prompt the Fed to ease, allowing markets to recover relatively quickly after an initial decline.

Key Takeaways

Japan's rate hike is delayed, not dead, and the window between now and then is narrower than markets think. When it lands, stocks, bonds and crypto will all feel the squeeze simultaneously as trillions in yen-funded positions are forced to unwind. US tech gets hit first, Treasury yields climb, Bitcoin - which has never been the safe haven it claims to be.

The yield gap between Japan and the US may soften the blow and prevent a full blown crisis, but make no mistake, the direction of Japan's monetary policy is clear. The BOJ April 27-28 meeting would be the first real signal. Watch the language around June guidance closely, because the carry trade doesn't send us a calendar invite before it unwinds. Stay calculated. Stay sharp!! ��

Disclaimer

This article is for general informational purposes only. I give no warranty and accept no responsibility or liability for the accuracy or the completeness of the information and materials contained in this article and on this website. Under no circumstances will I be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material in this article and on this website. NOTHING ON THIS WEBSITE IS FINANCIAL ADVICE.

Hash Ribbon Signal: Is BTC Moving From Capitulation To Accumulation?

Sun, 01 Mar 2026 05:50:41 GMT

Aleisha Lee, CPA, Licensed Real Estate Agent (Queensland)

1 March 2026 < 2 minutes read

After $BTC rallied to $126k in October 2025, it suffered an aggressive 50%+ drawdown , falling below the key psychological level of $60k at one point in early February. This decline coincided with the 30DMA Hash Rate crossing below 60DMA Hash Rate – a classic sign of miner stress. When this occurs, it suggests mining revenues are no longer sufficient to cover operational costs, forcing less efficient miners to s hut down their mining rigs and liquidate their BTC reserves. The result is a wave of intense selling pressure, contributing to the recent billion-dollar liquidation in leveraged long positions.

Now, the Hash Ribbon Indicator is finally flashing a signal that may mark the end of a 3-month miner capitulation – one of the longest Bitcoin winters in history, according to data from Glassnode .

Source: CoinGecko.com

This raises the question: is BTC forming a structural bottom and its recovery is on the way?
It may be too early to tell. If the miner capitulation persists and $BTC fails to reclaim the production cost level quickly, financial stress could trigger another round of miner capitulation selling. From a technical standpoint, the broader trend – both weekly and monthly charts remain bearish. The recent rally could be just a bull trap, with price potentially r etesting the $60k key psychological support level.

Source: Bloomberg

On the flip side, the curl up in Hash Rate suggests the 30DMA may soon cross back above the 60DMA – a reliable metric for spotting a macro bottom . At the time of writing this post, reports have confirmed that the joint US-Israel strike has taken out the Supreme Leader of Iran, and this conflict is injecting fresh geopolitical volatility into the global markets. On the back of the news, crypto market is rebounding from yesterday’s lows, with $BTC hovering around $67k, trading just slightly below its average production cost of approximately $68k ( data from 99bitcoins) . This level is commonly referred to as the ‘deep value zone’. The last time this setup occurred was in November 2022, when BTC bottomed near $15,500 before starting a sustained recovery. If history repeats, the market may be approaching a recovery crossover – signalling selling exhaustion and potentially allowing renewed demand to drive $BTC higher again.

Key Takeaways

While broader trends remain bearish and risks persist, the Hash Ribbon Indicator combined with $BTC hovering near the deep value zone suggests we may be approaching a macro bottom . Miner capitulation appears to be easing, selling pressure is subsiding, and this could represent a window of opportunity to position for the next potential phase of $BTC accumulation.

Disclaimer

Bitcoin's Digital Gold Narrative Has Failed

Tue, 24 Feb 2026 06:01:41 GMT

Aleisha Lee, CPA, Licensed Real Estate Agent (Queensland)

24 February 2026 < 4 minutes read

Although BTC shares certain characteristics with gold — scarcity, high mining costs, and difficult to replicate, recent price action and its strong correlation to tech equities (0.8 to the Nasdaq and 0.73 to the iShares Expanded Tech Software ETF, IGV) show that BTC behaves like a high-risk tech stock rather than a “ flight to safety ". The macro forces powering gold to record highs simply aren't driving BTC, creating a clear divergence in performance.

Source: The Bitcoin Magazine

BTC Fails the Institutional Monetary Function

BTC is not recognised by major central banks as a reserve or collateral asset in the same way as gold or sovereign bonds . Central banks hold gold as part of foreign exchange reserves be cause it is highly liquid, globally recognised, and free from counterparty risk , making it a dependable store of value during crises.

In periods of stress, foreign central banks can access $USD liquidity through swap line agreements with the Federal Reserve, with both parties agreeing to reverse the transaction at predetermined exchange rates, minimising credit and exchange rate risk. Gold can also be mobilised, sold, or used as collateral , functioning as monetary insurance that preserves liquidity and confidence during extreme economic or geopolitical events. Bitcoin , by contrast, is not recognised as a reserve asset , is excluded from central bank liquidity facilities, and does not serve as collateral in sovereign funding markets, offering no equivalent institutional utility.

Source: CNBC

BTC Fails the Sovereign Reserve Function

Non-OECD central banks—including China, India, Turkey, and Poland—have increased gold purchases to diversify away from $USD, hedge against inflation, and protect against geopolitical risks , particularly following the freezing of Russian assets by Western powers in 2022. These same institutions are not adding BTCs to their primary reserves. This demonstrates that BTC fails the sovereign reserve function: it cannot provide crisis liquidity, act as collateral in monetary operations, or serve as a trusted hedge against geopolitical and financial instability .

European and other central banks have formally rejected BTC as a reserve asset. The European Central Bank, National Bank of Poland, Swiss National Bank, and Hungarian Central Bank have a l l rejected BTC in their official reserves. Meanwhile, China , pursuing “ gold supremacy ” to build a U.S. dollar alternative, has added over 1,080 tons of gold since mid-2022—potentially lifting its reserves to an estimated 5,500 tons, second only to the U.S, while its 194,000 BTC holdings are largely historical seizure assets.

Recently, China has banned cryptocurrency trading for its 1.4 billion population to maintain financial control and preserve ‘common prosperity’ under the Communist regime. The position adopted by central banks globally reinforces the view that BTC cannot be relied upon to maintain sovereign monetary stability, provide crisis liquidity, or function as a dependable strategic reserve asset.

Source: Cryptonews.net

BTC's Concentrated Ownership Has Failed the Global Neutrality Test

BTC’s ownership is heavily concentrated in the United States rather than being globally distributed. Of the top 20 holders, 18 are U.S.-based entities , and Michael Saylor’s Strategy (NASDAQ:MSTR) alone controls roughly 717,131 BTC, or 3.4% of the total supply.

U.S. spot ETFs and institutional investors hold an additional 12% of circulating BTCs. This concentration exposes BTC’s price and stability to U.S. domestic conditions, policies, and market sentiment, making it extremely vulnerable to geopolitical or financial shocks. In contrast, gold’s distributed global ownership allows it to act as a neutral and reliable crisis hedge.

BTC Fails the Permanence and Security Test

BTC’s security and scarcity are increasingly threatened by long-ter m risks such as quantum computing . Dormant BTCs, which estimated at over 7 million coins, including Satoshi Nakamoto's 1 million coins, could potentially be ac cessed by future quantum attacks, creating the risk of sudden supply shocks that undermine the coin’s fixed-supply narr ative. Gold , in contrast, benefits from a 6,000-year trust premium , while BTC’s 17-year history leaves institutional investors questioning its reliability as a permanent, risk-free store of value. Thes e vulnerabilities erode BTC’s claim to function as a stable, long-term hedge or digital equivalent of gold.

Key Takeaways

Recent price movements clearly illustrate gold’s resilience a nd BTC’s failure as a hedge . While gold has rallied through macroeconomic and geopolitical headwinds — tariffs, the Iran conflict, government shutdowns, and currency crises, Bitcoin has largely moved in tandem with risk assets, failing to protect investors during turmoil.

For BTC to reclaim the digital gold status, it must begin to behave like a true hedge in times of stress. Until then, gold remains the enduring safe-haven, while BTC’s “digital gold” narrative remains a fairytale for investors.

Disclaimer

Solana Spot ETFs - Wall Street Meets Web3

aleisha@aleishalee.com.au (Aleisha Lee) — Mon, 16 Jun 2025 04:03:06 GMT

Aleisha Lee, CPA, Licensed Real Estate Agent (Queensland)

16 June 2025 < 3 minutes read

The Uniqueness of SOLANA

While Ethereum (ETH) still leads in terms of market capitalisation and ecosystem maturity, its dominance in the smart contract platform has diminished and its position is being challenged. SOL represents a new wave of blockchain technology: ultra-fast, low-cost, and developer-friendly. SOL typically costs a fraction of a cent, around $0.00025 per transaction and has a theoretical capacity of up to 65,000 transactions per second (TPS). This is largely due to its unique consensus mechanism, which combines Proof-of-History (PoH) and Proof-of-Stake (PoS) to streamline how transactions are ordered and validated. ETH, by contrast, processes 15 to 30 TPS at around $0.02 per transaction and BTC doesn't have specific use cases beyond being a store of value and a unit of exchange.

Source: The Solana Daily

It is clear that SOL's highly-anticipated spot ETF approval reflects not just regulatory momentum shift but a growing institutional interest in alternative Layer 1s. Once approval is granted, this would mark the first time an altcoin beyond ETH is approved for direct market exposure via an ETF product, breaking new ground for what is considered "institutional-grade" in crypto.

Understanding ETFs

Exchange-Traded Funds (ETFs) are investment vehicles designed to track the performance of a particular index, sector, commodity, or other asset class. They enable investors to buy their shares on stock exchanges and gain exposure to a diversified portfolio without needing to purchase each asset individually.

For traditional markets, Solana Spot ETFs approval will mark a major disruption. These ETFs offer both retail investors and institutional players with simplified, regulated gateway into the crypto space - no private keys, no wallets, just pure price exposure through familiar financial instruments . Furthermore, Solana brings more to the table than accessibility alone. It's a thriving ecosystem powering DeFi, NFTs, tokenisation, and even integrations with giants like Visa. An ETF tied to such a dynamic network introduces traditional capital to a far more active and utility-driven crypto economy than BTC and ETH can offer.

Crypto Market Surge

As evidenced in the latest Crypto Market Capitalisation published by CoinMarketCap , the crypto market continues to demonstrate strong momentum, with total market cap reaching $3.44 trillion in May 2025, despite the recent market sell-offs. This uptrend reflects renewed institutional interests, increased retail participation, and the expanding adoption of blockchain technologies across various sectors.

BTC and ETH Spot ETFs have both laid the foundation for regulated crypto investing, and their success is a testament to investor appetite. As the crypto ETF market expands, so too will the variety of available financial instruments, from spot ETFs to crypto options, and perhaps eventually, crypto derivatives.

The much-anticipated regulatory nod for Solana Spot ETFs won't just accelerate mainstream adoption - it will reinforce the maturity, credibility, and resilience of the broader crypto ecosystem. The financial world is taking notice, and it is time for us to pay attention.

Source: BTC.Inc

Trump 2.0 - New Era for Crypto

With a pro-crypto government taking shape - and a sitting U.S. Vice President JD Vance making history by addressing the Bitcoin 2025 Conference in Las Vegas last Wednesday, promising to eliminate aggressive regulation and promote a pro-growth framework for crypto - it's clear we are witnessing a defining moment for the industry.

"Crypto is a hedge against bad policy making from Washington, no matter what party is in control... I am here today to say loud and clear with President Trump, Crypto finally has a champion and an ally in the White House."

- Vance told the Crowd at Bitcoin 2025 Conference, LA.

For years, the crypto industry faced staunch resistance from regulator under the previous administration, with the SEC repeatedly rejecting ETF applications, citing concerns around market manipulation, custody, and investor protection. It wasn't until a pivotal lawsuit against the SEC - ruled in favour of Grayscale - that ultimately led to the approval of BTC ETFs on 10 January 2024, followed by ETH ETFs on 23 May 2024.

Wall Street Meets Web3

Now, all eyes are on SOLANA. When approved, SOL Spot ETFs would introduce Wall Street to a new kind of digital asset: one that goes beyond BTC's store-of-value narrative, or ETH's programmable infrastructure, SOL offers a lightning fast, scalable, high-performance network powering real world use cases from tokenised payments and decentralised trading to Web3 gaming. Its entry into ETF space could fundamentally reshape portfolio strategies, accelerate the adoption of on-chain financial products and blur the lines between Wall Street and blockchain innovation. Rather than simply coexisting with traditional markets, Solana represents the next wave of crypto assets poised to challenge, compete with, and ultimately redefine Wall Street.

Disclaimer

The Business of Selling Dreams

aleisha@aleishalee.com.au (Aleisha Lee) — Fri, 08 Jul 2022 12:28:33 GMT

Aleisha Lee, CPA

8 July 2022 | < 12 minutes read

Source: BrandingMag.com

Defining Luxury

The word “luxury” comes from the Latin term “luxus”, which means sumptuousness and excess. Luxury is all about the extraordinary. “Economically, it’s about price and value; culturally it’s about the magical aura the brands radiate; socially, it’s about status and exclusivity; psychologically, it’s about how the brand makes customers feel special; and managerially, it’s about creating a culture of excellence.” (1)

Source: Jetset Mag, Streets of Monaco, the 508-foot-long superyacht with a jaw-dropping value of £1.1 billion

Apple’s Inc’s mastermind Steve Jobs once said, “Don’t sell products. Sell dreams” . Steve Jobs was no stranger to making a business successful. His legacy and principles continue to drive Apple’s current and future products even a decade after his death. Consumers queue up overnight for the new releases of iPhone, iPad, and Macbooks despite the fact that Apple’s products are not technologically unique or superior.

Apple is now sitting on a market capitalisation of $3 trillion. It remains the most valuable brand in the world with a record brand value of over $355 billion. If a $1 billion start-up is a unicorn, Apple Inc would definitely be called a Griffin. (2)

Source: Apple Inc.

Bernard Arnault , the CEO of LVMH which controls more than 70 most valuable luxury brands in the world including Louis Vuitton, Moet & Chandon, Givenchy, Bulgari, Kenzo, and Christian Dior, just to name a few, describes his products as "items that serve little purpose in the lives of consumers except to fulfil dreams. And those dreams don't come cheap" .

Source: Forbes

Gucci , founded by Guccio Gucci in 1921, is one of the oldest Italian fashion brands in operation today. Interestingly, It’s not about the handbags, it’s about “Are you a Gucci man or a Gucci woman?” . Sitting on a brand value of $18.1 billion according to the most recent brand valuation (3) , Gucci’s former CEO, Robert Polet , says "We are not in the business of selling handbags. We are in the business of selling dreams".

At Gucci, these dreams come true for as little as $530 for a set of collector-worthy playing cards printed with a whimsical forest print, presented in a supreme case that’s stamped with the world’s most recognisable insignias - the ‘Double G’ emblem. The set immediately brings out the playful spirits in us and evokes our desires to be part of Gucci’s dreamy lifestyle of sports and leisure. Aspirational? Absolutely.

Source: Gucci, the Garden of Dreams

Longinotti-Buitoni , President and CEO of Ferrari North America , shows in his book titled ‘Selling Dreams’ how to create a dream product or service by creating images that spark customers' imagination and attract lasting interest. In a report published by the Brand Finance Global 500, the value of the Ferrari brand is worth an estimated $9.1 billion, making it the strongest brand for the second consecutive year. As of April 2022, Ferrari has a market capitalisation of $40.75 billion, claiming the world's 440th most valuable company by market capitalisation.

Source: Ferrari.com

These brands come from different high-end sectors like automotive, fashion, and technology. Not only that they represent the epitome of luxury, but they also manifest themselves through brand strategy and identity, shopping experience and compelling storytelling. They create stories in which customers want to play a part. Artisans, craftspeople, designers, and strategy consultants work collaboratively to conjure up images and spirits that bring the brands alive and evoke a cult-like following.

The luxury appeal is undeniable

The psychology of luxury consumption suggests that our timeless love affair with luxury is the manifestation of all the different and never-ending desires we have stemmed from the drive to meet the needs for connection, acceptance, esteem, identity, significance, sense of distinction, and superiority. The brands' ability to project exclusiveness, exquisiteness and elitism fulfils these social needs and gives them the power to command and sustain much higher prices than brands without. Dreams were kept alive even in the most difficult and challenging business environment. The COVID-19 global pandemic had impacted many and disrupted the supply chains, but it had not quelled the appetite for high-end possessions. The luxury industry has been exceptionally resilient and the pursuit of expensive experiences continues to soar, pushing up prices for luxury items while many other industries are struggling to stay afloat.

Source: GQ.com

Demand spikes when customers see a celebrity wearing an item and immediately want to imitate the ideal. To maintain exclusiveness, the luxury industry responded by lifting prices. In February this year, Louis Vuitton raised prices for the second time in four months, increasing handbag costs by an average of 20 per cent. Chanel, too, has upped prices by the same percentage. Theory suggests that consumers' purchase decisions are motivated by the feeling of superiority and elitism, by keeping prices almost out of reach, these luxury products retain their dream value and rarity. The rationale behind this concept is demonstrated in The Dream Formula.

Introducing the Dream Formula

Developed by Bernard Dubois and Claire Paternault , the Dream Formula is a regression equation that tells the structural relationship between awareness, purchase and dream. The formula was developed based on interviewing and analysing the consumption behaviour of 3,000 consumers, using self-completed and face-to-face questions to assess their shopping habits and perceptions relative to a set of 34 luxury brands across five major European countries.

In this formula, the awareness coefficient is positive while the purchase coefficient is negative. The negative value of -8.6 is interesting because it means that when there is no awareness or purchase, the dream value is negative. Brands, therefore, need to create a decent amount of awareness to even have a positive dream value. The awareness, in turn, creates a desire in the mind which then leads to more purchases. The negative coefficient of 0.59 indicates the level of diffusion at which a luxury brand adversely affects its dream appeal.

Luxury goods are perceived by customers as rare and exclusive – the ‘rarity principle’ . According to this formula, awareness feeds dreams, purchases make dreams come true. When the brand is over-diffused, the rarity appeal slowly diminishes and the brand starts to lose its luxury character. In another word, the increase in purchases is when the brand stops being considered rare.

In order to keep dreams alive, consumers’ awareness of the brand must surpass the diffusion.

Source: Robb Report Singapore, with only 200 N°XIII red decanters available worldwide, the rare N°XIII experience is limited to one decanter per club per night. Only 0.0000038361% of people worldwide will have the chance to experience N°XIII. Rare, exclusive, strictly limited, and exceptionally striking.

The basic motivational drivers for luxury consumption are similar. Luxury value perception does not vary across nationalities or cultural groups. Global management consulting group - BCG’s latest study found consumers spent $1.8 trillion worldwide on luxury goods in 2020, amid the COVID-19 pandemic. Research from Statista also reveals the luxury goods market is a global behemoth, sitting on a valuation of $309.6 billion in 2021 with the world’s top 100 luxury goods companies generating a combined revenue of $252 billion.

Although the impact of the pandemic has been unprecedented and staggering, the latest projections published by Fortune Business Insights suggested the luxury market is expected to grow to $382.6 billion in 2025 at a CAGR of 5.4%. Research conducted by Bain & Company further indicated that global luxury is experiencing an impressive growth of 14% YoY in 2021, mainly driven by personal luxury goods and hospitality. Global sales of personal luxury goods are projected to reach $320 billion this year as per Bain’s most conservative estimates.

Source: Bain & Company, Luxe Digital

On a global comparison, the United States remains the largest consumer of luxury goods whilst Australia is regarded as a strategic market. In Australia, research shows homeownership has become increasingly unattainable for many younger Australians. As a result, around 81% of Australian affluents seek luxury items that can be long-term investments. Australia also has one of the highest portions of disposable income which is $45,800 AUD, ready to be spent on luxury goods for self-betterment and personal indulgence. Revenue in the Australian luxury goods market amounts to $7.11 billion in 2022 and is expected to grow at an annualised rate of 3.87% over the next five years through 2022 – 2027. (5)

Luxury consumption theory holds that consumers buy disproportionately more luxuries after their basic needs have been met, feeding the underlying desire to seek the extraordinary.

Creating the extraordinary – the ‘wow’ factor

Luxury is all about the extraordinary. There is no luxury that comes cheap. Many of us often associate luxury items with quality, beauty, and expensiveness. For an item to be perceived as luxury, extraordinary value creation in both tangible and intangible forms must be present and marketed through an authentic brand story that would deliver the ‘wow’ factor. Luxury isn't only about beautiful products nor would eye-watering price tags make an item a luxury. Being expensive is somewhat irrelevant in the high-end market.

To illustrate this concept, a billionaire with a personal fortune of $5 billion USD, buying a $500k USD Mercedes-Maybach is just a rounding error. For some others, it is an unattainable dream. The term 'expensive' is only relative to the individual. Putting an expensive price tag on an item alone does not make it a luxury. What gives extreme value is the combination of both tangible and intangible elements that connect customers to the brand. Tangible elements such as exceptional design, material, craftsmanship, and packaging will form part of the equation in creating brand value.

The main driver in building an extreme ‘wow’ factor that makes customers happily pay 5 times more is the intangible element of delivering the extraordinary – one that takes the customers to a different world; a world that’s almost out of reach; a world that makes them feel instantly sexier, more glamorous, more powerful and desirable.

Source: Mercedes

This dream value gives the explanation why customers are willing to pay a premium for the thrill of owning something that would give them a perceived sense of prestige and status. Without it, brands cannot command a substantial premium above what the supply and demand curve dictates.

A good example is the high-end diamond industry, loose diamonds have a set international price, unlike other gemstones. In this respect, diamonds are somewhat like gold. The intrinsic value of diamonds is based on the 4Cs which set the basic standard for grading that determines the value of the diamond.

A 1-carat brilliant-cut diamond ring in a solitaire setting will cost approximately $12,000 at mass-market jewellers such as Michael Hill. With other factors being as equal as possible, a similar diamond ring will cost $60,000 at Tiffany and likely another $25,000 to $35,000 more at Cartier.

Source: Vogue

Again, dream value is the explanation for this price phenomenon.

In the world of luxury, “Dreams require some history or story that sparks the imagination, creates uniqueness, elevates the customers to some sense of spirituality or status, and provides incredible experiences.” (6)

When someone experiences a brand, through sight and sound, the person often has a reaction, a personal feeling. Sometimes the reaction is emotional, sometimes it’s intellectual. These reactions create a story, a story of how a brand makes a person feel or think. The way a brand grows is by telling these stories and putting them out into the world. When customers see themselves in that story, they want to experience it too. This process of creating longing and passionate imagining is how the dream value is built.

Source: Riken.jp

For example, the Cartier brand itself is perceived by customers as a symbol of decadence, sophistication, glamour and uniqueness. It has a century-long history full of adventures and incredible journeys closely related to the Cartier family that started the brand in 1847. The brand has valuable heritage related to the crafting of jewellery, travelling, exploring, royalty and the dedication of the Cartier family that add memorable meanings to the brand. and King Edward VII once named Cartier “jeweller of the kings and the king of jewellers.” When a customer buys a ring from Cartier, it will be exquisitely presented in its iconic little red box. The little red box isn’t just what the name suggests, rather, it is a treasure casket that carries not only surprises but lofty promises, dreams, joy, happiness and a declaration of eternal love .

Source: Cartier

Adding to the story of eternity and true love, the shopping experience and the clienteling further complement the dream value of Cartier and justifies the price premium. Each boutique is architecturally designed, from the ceiling to the colour and the material choices. It exudes the level of luxury and intimacy that make customers linger, whether or not they are making a purchase. Bottomless Louis Roederer and Osetra caviar on mother of pearl spoons served by immaculately groomed boutique ambassadors are just part of the extraordinary Cartier experience.

Buying a diamond ring from Cartier might be out of a lot of people’s price range. For me, buying a ring at a mass-market jeweller is underwhelming and storyless. It lacks that captivating and inspiring element, the promising story that begins with ‘once upon a time’ and ends with ‘happily ever after’ , and the memorable and emotional progression in between. In comparison, the Cartier ring itself lives longer than time and it is designed not to be replaced. The lasting story and the extraordinary experience that calls for scarcity, prestige, heritage, and eternity are something other jewellers cannot replicate.

Final words

Desires are strong and dream last long. The brand story evokes desires, creates dream value and accumulates symbolic capital. It explains its existence and purpose and defines its uniqueness from other brands. Luxury is the business of selling dreams. No one wears a Burberry trench coat merely to stay warm. No one buys a bottle of Dom Perignon just because they are thirsty. No one spends half-million on a Bentley Continental GT just to get them from point A to point B. We can’t put a price tag on dreams, but we can put a price tag on dream objects. Many of us seldom desire what we can normally have in the ordinary world, instead, we desire something that’s out of reach and unobtainable. These high-end brands will continue to make fortunes by giving customers the space to project their unlimited desires and fantasies while offering products to cater to such aspirations.

References

(1). Hannes Gurzki, Dreaming Up A World, Forbes, 20 November 2019, https://www.forbes.com/sites/esmtberlin/2019/11/20/dreaming-up-a-world--how-luxury-brands-create-desire/?sh=e79c33771af9.

(2) Kif Leswing, Apple becomes first U.S. company to reach $3 trillion market cap, CNBC, 3 Jan 2022, https://www.cnbc.com/2022/01/03/apple-becomes-first-us-company-to-reach-3-trillion-market-cap.html#:~:text=Apple%20hit%20a%20market%20cap,all%20of%20its%20product%20lines.

(3). P. Smith, Brand value of Gucci worldwide from 2016 to 2022, Statista, 13 May 2022

(4). Statista Consumer Market Outlook, Statista, August 2021, https://www.statista.com/study/61582/in-depth-report-luxury-goods/

(5). Luxury Retailing in Australia, Ibisworld, 30 May 2022, https://www.ibisworld.com/au/industry/luxury-retailing/5465/

(6). Pierre Valette-Florence, Luxury brand desirability and fashion equity, Wiley Online Library, 27 September 2018

Disclaimer

Happy Ageing - the Promise of the AI-Powered Care Bots

aleisha@aleishalee.com.au (Aleisha Lee) — Sun, 11 Jul 2021 11:45:45 GMT

Aleisha Lee, CPA

11 July 2021 | < 15 minutes read

Source: Lifeline

A 75-year Harvard study found that "the secret to longevity and happy life is through connection". (Mineo, 2017) As our grandparents grow old, they will find it more and more difficult to create social bonds. Loneliness is a big problem among their generation. Data indicated that around 10 to 15 per cent of senior Australians are experiencing anxiety and depression, and at least 13 per cent of them over 65 are chronically lonely. (AIHW, 2019) Social isolation, depression, helplessness and boredom are also common complaints, with many feeling 'abandoned'. The condition worsens when they also suffer from immobility, cognitive decline and other health issues such as dementia.

A demographic shift

In Australia, research has shown a significant increase over the past ten years in the prevalence of three-generation households and "grandfamilies", meaning households consisting solely of grandparents and grandchildren. (Australian Institute of Family Studies, 2015)

Source: Best Home Care

There is a positive correlation between this demographic shift and a remarkable increase of adult grandchildren serving as the primary caregivers for their grandparents. A recent industry report published by Deloitte showed that 26 per cent of informal caregivers are between the ages of 15 and 44 in Australia. (Deloitte Access Economics, 2020)

Millennials, members of Gen X and Gen Y are ageing into the caregiving role for their senior loved ones. Many of us have also lived with or have been raised by our grandparents. We feel close to them and happy to take on the caregiving role simply out of love. Sometimes, we live closer to them than other family members, and it makes sense to contribute to the caregiving role.

Source: ABS

The idea of age-in-place

There is increasing evidence showing the idea of ageing-in-place is gaining popularity. Ageing-in-place is a living arrangement where the elders can remain living in their home and be looked after by a close family member. Studies have shown that seniors overwhelmingly prefer this idea instead of living in an assisted living facility or retirement institution.

A recent study revealed that more than 86 per cent of the Australian population aged 65 and over live at home, and 11 per cent reside in retirement villages and other eldercare institutions. (AIHW, 2019)

Home care arrangement has many obvious benefits which are often absent in retirement facilities, such as comfort and security, social interaction, companionship, compassion, personalised one-on-one care, closer ties to family, and the list goes on. Elders who are ageing-in-place are much happier and have a higher quality of life than those living in retirement facilities.

The juggling act of caregiving

We know that keeping our grandparents at home during their golden years is an admirable gesture and a wonderful thing to do. But in today's fast-paced society, we are often so busy with study, work, children, and day-to-day schedules that visiting them once a week can sometimes be difficult, let alone taking time off to care for them daily. It almost seems like mission impossible. Many grandchildren carers often find themselves having to make life-altering sacrifices for taking care of loved ones.

While much attention has been paid to working parents trying to balance their career with parenthood, grandchildren bearing the burden of eldercare have a very different experience. It is a tough job, unpaid, and often undervalued.

Many may think that looking after grandparents is all about grocery shopping, taking them out for a stroll, or helping them with some life administrative tasks. In reality, family carers pick up the roles of personal chefs, nutritionists, physical therapists, psychologists, patient advocates, and companions. Many of whom are working under incredible stress, financial strains, and a lack of sleep. As a result, they often find that they need to withdraw from social activities, give up on their hobbies, switch to a less demanding job, take time off, or even opt-out altogether to make time for their caregiving duties.

Recent research revealed that in Australia, only 22 per cent of primary carers have full-time employment compared to the population average of 43 per cent. In contrast, part-time employment for primary carers ranged between 29 per cent and 34 per cent, compared with 22 per cent and 23 per cent for the general population. (Deloitte Access Economics, 2020) These statistics show that caregivers often have to sacrifice their own prosperity and put their life on hold to care for those they love.

Source: Semantic Scholar

Embrace the power of Artificial Intelligence (AI) technology

We know that there is nothing better than a hug from our loving grandparents. Giving them a happy elder life without losing ourselves means we have to find ways to do more with less. Today we are already living in an era of unlimited technology. Practically every task in our daily life is tech-driven. For example, those serious coffee drinkers like myself, we can now start our day with the smart coffee maker that cleverly recognizes our daily coffee ritual and sets a timer for our morning brew the night before. And for those who like to hit the snooze button in the morning, the HiCan Smart Bed promises to activate the brain's glymphatic system, recognize the circadian rhythm, and wake us during the lighter sleeping stage to prevent us from waking up cranky and groggy. Technology has undoubtedly made our lives so much more comfortable than ever before.

No longer a fantasy, a computer-controlled future for eldercare has arrived.

For years, Artificial Intelligence (AI) is just a dream for computer scientists and Hollywood sci-fi movie producers. As technological development accelerates and permeates every aspect of our lives, a combination of AI, machine learning, deep learning, and robotics is starting to transform the world of eldercare.

Already on the market is a dazzling array of new AI-driven devices and smart home technologies promising to make day-to-day life simpler for ageing grandparents and family carers.

Imagine having a trusted companion, caregiver, helper, butler and nurse, all in one that you can summon its companionship and service at any time, constantly and tirelessly present, placing our grandparent's welfare at the centre of its attention.

Powered by AI and known as the 'care bots' , they are personal robots specifically designed to assist with the activities of daily living and promise to deliver improved quality of life. These evolutionary care bots have eased their way into home care, assisted living and aged-care facilities near us.

Source: Semantic Scholar

The technology behind care bots

The technology behind these smart care bots is the same as any virtual assistant, reliant upon input and intelligent algorithms. Like the chatbots technology, it is a call-and-response with the user giving instructions to the robot, and it will respond with the correct information. Care bots are programmed to reason, learn, comprehend, and react to different situations in different environments.

Care bots often have state-of-the-art navigation, motion sensors, fall detection, voice activation, GPS, bluetooth, cellular connectivity, smartphone monitoring apps, IoMTs, biometric tracking and sophisticated perception technology . They collect many terabytes of data from observing and monitoring our loved ones' everyday activities and their surroundings. Through this complex data mining process, big data is analysed by computer scripts known as algorithms to track activity patterns, predict behaviours, monitor wellness, identify vital signs, and make suggestions about daily living and other leisurely activities.

Source: The Information Age

Like how "Hey Siri" activates Apple devices, care bots respond to voice commands such as "help me", "what's for dinner", "take my temperature", "I'm not well" or "call my granddaughter". They can also recognise gestures and head movements, and detect cough-like motions and body expressions relating to pain.

Care bots come in many different forms and guises.

Some are human-like and can perform minor and repetitive tasks such as fetching food, making juice, turning off lights, picking up items off the floor, and set reminders when it is time to take medications.

Some are delivery robots equipped with autonomous navigation technology that zip around like motorized room service carts. Some are heavy-duty humanoid robots built with powerful hydraulics to help the elders with mobility and transport needs.

For those with mental conditions such as dementia and Alzheimer's disease, there are pet-style and doll-like care bots designed to improve the mood, soothe agitation, and alleviate some of the symptoms.

Apart from their functional capabilities to improve safety and provide care, care bots are becoming increasingly human-like in their appearance and behaviour to eliminate the negative feelings of eeriness, danger, and threat. They often have joyful names such as Stevie, Lovot, KiKi, Paro, Woobo, Robear, Pillo, and so on, to trigger a soothing and heartwarming psychological effect on the elders.

Meet the top 10 most loved care bots

ElliQ by Intuition Robotics

Source; elliq.com

ElliQ is an aging companion designed to keep elders active, independent, and engaged. Named after the Norse goddess representing old age, ElliQ does not have a face, arms or legs, but she is a tabletop that illuminates when you call her and talks while keeping the elders active. The robot imitates user-to-user head motions. She can look up and be excited. She also answers her phone, reads emails, and plays music.

Besides wellness and environmental monitoring, ElliQ uses machine learning and computer vision to provide proactive suggestions, entertainment, and activities.

ElliQ can remind elders to take their medicines, recall their appointments and prompt suggestions relevant to the current schedule. Elders can play games, access social media, and conduct on-screen video chats to stay connected to the outside world.

Robear by Riken

Source: Riken.jp

Robear is a strong robot with a gentle touch that can do tasks such as lifting a patient from a bed in a wheelchair, supporting a standing patient but needing help maintaining balance, and other heavy lifting duties. Weighing just 140 kilograms, Robear is like a giant, gentle, cartoon-shaped bear , hence the name Robear. It has actuators with a meagre gear ratio, which enables joints to move very fast and accurately. It also includes torque sensors and tactile rubber-type capability sensors that allow gentle movement and ensures that the robot carries out power-intensive tasks such as lifting patients without jeopardising them.

Sam by Luvozo

Source: Luvozo.com

Sam is a robot companion that enhances the quality of life for elderly and disabled people. This daily companion aims to prevent the isolation of older people and to prevent them from falling. Sam is a human-sized, smiling robot that combines state-of-the-art technology to provide elders with frequent inspection and non-medical care. Sam enables carers to guarantee remote monitoring, physical safety, and communication with loved ones.

The robot has a display and cameras that carers can use to track and make sure they are in good shape visually. It also has sensors and SAM Fall Assessment System software, which allow him to move, thus preventing falls by identifying the pitfalls .

Zora by RobotLAB

Source: Robotlab.com

Zora is an interactive caregiving robot who joins elders in aerobics and singing, playing games and reading. Zora weighs only 5.7 kg and is just over 57 cm. While Zora is small, she speaks an impressive 19 languages. Controlled via tablet, Zora can lead a physical therapy class, read TV shows, weather forecasts, or local news. It can also keep elders entertained and active with dance and exercise.

iPal by AvatarMind

Source: ipalrobot.com

iPal is a humanoid robot designed to serve the elderly as social companions, educators, and safety monitors. This mobile robot has legs mounted on wheels to move around the home. It can sing, dance, and chat. It has a wide range of motion in its arms and neck, built-in obstacle avoidance software, and a low gravity centre that increases its stability. iPal is 106 cm tall, weighing just over 12 kilos, and comes with a built-in camera, five microphones, and WiFi / Bluetooth capabilities.

Care-O-Bot by Fraunhofer IPA and Mojin Robotics

Source: care-o-bot.de

Care-O-Bot is a mobile robot assistant to help the elderly in their daily lives, providing health care, companionship, and cognitive stimulation. It has a vaguely humanoid shape with a round head, arms, hands, trays and a rolling base. It can perform a range of household tasks such as delivering food, drinks, and medications to the patient and assisting in cooking and cleaning. It can place emergency calls, host video conferences, and engage in conversations.

Care-O-Bot features a touch screen, microphones, and speakers for multimodal user input . Face cameras allow it to adjust its behaviour based on gesture and user interface recognition. It can speak through LEDs, sounds, speech-to-speech, laser, and body gestures.

Buddy by Blue Frog Robotics

Source: bluefrogrobotics.com

Designed to be a great emotional companion, Buddy can secure, assist, connect, and entertain the elderly at home. Buddy has a small, dome-shaped body on a fully mobile platform with three wheels. Its oblong face is full of cartoonish emotions. Buddy provides a range of services, including home protection, social interaction, personal support, multimedia, entertainment, calendar reminders, and interactive interfaces. Buddy also has speech recognition software; home and object detection, recognition, and tracking capabilities.

Buddy can detect falls or unusual events and alert emergency services. It offers mobile telepresence, including Skype and Facetime connections, photo and video sharing, and social media connections. It can set reminders, alarm clocks, and to-do lists and provide practical information such as weather forecasts, recipes, and traffic. It can be a storyteller or an interactive teacher.

Paro by AIST

Source: aist.go.jp

Paro is a lifelike robotic seal with long eyelashes and big black eyes that open, close, and follow movements. Paro is the size of a large cat, and weighs nearly 3kg . It charges by an oral electric dummy and has sensors that detect touch, sound, light, heat, and movements. Paro also reacts to changes in the elder's mood, physical touch and recognises its own name.

Pepper by Softbank

Source: softbankrobotics.com

Pepper is the humanoid robot that provides day-to-day companionship and support in everyday tasks. Pepper is capable of recognising human emotions, such as joy, sadness, anger and surprise. Using its cameras located in its head, Pepper can interpret a smile, frown, tone of voice, verbal and body language. Pepper can also engage in basic conversations, but the conversational capability is far from perfect and needs further development.

If it doesn't understand a question, it spits out a bunch of silly answers such as, 'I don't understand, how about a taco?', 'I can barely keep up with you in this conversation, but I think you are hot.'

Stevie by Robotics and Innovation Lab

Source: siliconrepublic.com

Stevie is what's known as the joke-telling and socially assistive robot. It is designed to be engaging physically and mentally. The 140 cm robot comes with autonomous navigation. It can roll through the home unassisted. The voice command "Hey Stevie" activates the robot, similar to "Hey Siri".

Stevie responds to other words with speech, gestures, and head movements . Tell him that you're sick, for example, and it slumps forward with a sorrowful frown on its LED-screen face and says, "I'm sorry to hear that." Pay Stevie a compliment, and the screen reverts to a smile. When at rest, its head tilts gently, and its digital brown eyes blink, patiently waiting for the next command.

Stevie's face can double as a video-conferencing screen, enabling the user to video chat with a doctor or loved ones. Other functions could be the difference between life and death . The robot can recognise voice commands such as "help me", and alert the carer to the elder in distress.

The eldercare robots are far from perfect, and much of the current robotic applications are still primarily focused on improving efficiency and enhancing quality and safety. Although concerns have been expressed about robots potentially reducing privacy, exposing people to data hacking, or even inflicting physical harm , it sure can help alleviate many stresses faced by family carers.

Some final thoughts

Age catches up with all of us, and there is no way of escaping it. We are so busy growing up, and we often forget our grandparents are also growing old. After caring for their children and grandchildren, receiving some love back in old age seems like natural justice. It reminds me of the Zulu-sung song 'Circle of Life' in the Disney Lion King movie. The song in its entirety is about young prince Simba's life journey from birth to adulthood through connection, love, loss, misfortune, the union with Nala, and the birth of their new cub on Pride lands.

I couldn't help but think that the 'Circle of Life' plays itself out in many families' everyday lives across the world, regardless of race, nationalities, or religious beliefs. Our family and our lives are part of a continuous life cycle, a connected continual process from birth to death that goes on ad infinitum.

At times our lives can be unbearably difficult, having to deal with many life stressors such as ill-health, depression, financial strains, relationship struggles, and so much more. Caregiving for the young and elderly is an inevitable part of human existence. As we get older, so do our grandparents. They will need our help, just as we once needed theirs.

Source: disney.fandom.com

Care bots will not replace human carers, just like computers didn't replace humans, rather, it is making ageing in place a much more viable and attractive option.

As emotion AI and brain-control technology continue to improve and develop, the best is yet to come. Perhaps in the not-so-distant future, care bots will have a built-in neural network that mimics the human brain. They will be able to not only think but also feel and behave like us. Then they can perform all kinds of customised care services and do almost everything we human can.

In my opinion, robots will always remain robots. They can appear empathic and helpful, but they are just machines. There is no amount of robotic neural technology or machine empathy that can replace the warmth, love and humanly touch from family. Caregiving is tough. But one day, we will want to look back, knowing that we did our best to give our loved ones a good journey and the best possible quality of life throughout their golden years. For me, joys and struggles aside, it is, without doubt, worth every bit of hard work and personal sacrifice.

References

https://news.harvard.edu/gazette/story/2017/04/over-nearly-80-years-harvard-study-has-been-showing-how-to-live-a-healthy-and-happy-life/

https://www.aihw.gov.au/reports/older-people/older-australia-at-a-glance/contents/service-use/mental-health

https://growingupinaustralia.gov.au/sites/default/files/publication-documents/asr2015b.pdf

Disclaimer

Is NFT the Biggest Technology Insanity or the Most Disruptive Innovation Ever?

aleisha@aleishalee.com.au (Aleisha Lee) — Thu, 29 Apr 2021 12:47:12 GMT

Aleisha Lee, CPA

29 April 2021 | < 15 minutes read

Source: 303 Magazine

Crypto is a fascinating space. With the rise of teen traders like Erik Finman , who made millions of dollars from crypto; Sydney schoolboy Sam Cornock making his first $10,000 AUD from trading digital currencies, and kids as young as eleven publishing a 57-page book on Bitcoin. Children are jumping on this emerging technology much faster than we think.

Just a few days ago, my tech-savvy 8-year-old boy from the so-called "Generation ALPHA" asked me to buy him a pet dragon from a popular digital dragon warrior game that runs on the Ethereum blockchain. The game centres around breedable, collectible, and very adorable creatures called the HyperDragons .

He explained that each dragon is one-of-a-kind and the green dragon that he wanted holds an enticing future promise that dragons will one day rule the planet. Therefore, he planned to train this little guy to protect the dragon castle, defend the floating islands and fight off any invaders coming onto the land.

These dragons come with specific attributes, skills, and unique appearances, and they are collectibles enabled by NFTs that players can exchange or transfer on the marketplace. He was keen to start his dragon collection. This particular creature was listed for sale at 1 ETH (equivalent to $3506 AUD at the time of publishing this post) on OpenSea.io - a P2P marketplace for crypto collectibles, like eBay for NFTs.

Source: eGamers.io

In short, NFT stands for Non-Fungible Token . Non-Fungible is not a word that we hear often. So, what does Non-Fungible mean?

Source: Infographic created by Aleisha Lee

Fungibility in economics is a characteristic of goods or commodities where each unit is interchangeable and indistinguishable. For fungible items, they are defined by their value rather than their properties; therefore, they can be exchanged. For example, ETH or dollars are fungible because 1 ETH / $1 USD is exchangeable for another 1 ETH / $1 USD.

Non-fungible is where each unit is unique and has individual properties, provably scarce with only one copy created on the blockchain, indivisible and fraud-proof. Things like photos, a meme, voice recordings, achievements, house and so on. These are things considered non-interchangeable with other items because each of them has unique properties.

Source: Infographic created by Aleisha Lee

Typical characteristics of NFTs:

Uniqueness. Each NFT has different properties which are stored, with metadata linking to the actual content of the NFT on a centralised blockchain server.
Provably scarce. There is usually a limited number of NFTs, such as only one copy, and the number of tokens can be verified on the blockchain, hence its provability.
Indivisible. Most NFTs cannot be split into smaller denominations, so you cannot buy or transfer a fraction of your NFT.
Guaranteed ownership rights. Like standard tokens, NFTs guarantee ownerships that can be easily transferred from one owner to another, and it is fraud-proof. NFTs can be implemented on any blockchain that supports smart contract programming, such as ERC-721 and ERC-1155 on the Ethereum network.

Let's get a bit geeky. How Do NFTs Work? What is the difference between ERC-20, ERC-721 and ERC-1155 ?

Source: Ethereum Stack Exchange

ERC-20 is a well-known standard for creating tokens on the Ethereum blockchain. It creates fungible tokens , so all the tokens are completely indistinguishable. The value of each token is the same. Take DAI Stablecoin as an example, DAI is an ERC-20 token created on the Ethereum blockchain that has a steady value of $1 USD. Another example is DeFi token UNI , which is a decentralised crypto exchange that runs on the Ethereum blockchain. It allows the swapping of ERC-20 tokens without the need for buyers and sellers to create demand.

Powered by the concept of digital shortage, ERC-721 creates non-fungible tokens where the tokens' intrinsic value is defined by their rarity and their unique properties. It makes ERC-721 tokens very reminiscent of collectibles. In other words, each token is unique in its entire existence and cannot be replicated or destroyed. When an ERC-721 token is created, only one copy exists. Users can create their own ERC-721 tokens by writing a piece of code in a smart contract that follows a basic template and then adding unique details about the token. These unique details can include the name of the owner, rich metadata or secure file links. ERC-721 tokens are, therefore, more appealing to its future buyers or otherwise known as 'collectors'.

While ERC-1155 is the next step in creating non-fungible tokens. The standard allows for trading contracts that support both fungible and non-fungible tokens. In digital games such as the World of Warcraft , it holds fungible items such as gold and arrows and non-fungible tokens such as armour, swords, shields or the rare Big Love Rocket . The ERC-1155 standard allows the developer to define both fungible and non-fungible tokens and decide how many of these tokens should exist.

Another blockchain-based game that is leveraging the power of NFTs is Decentraland , where the players can buy parcels of digital land that later resold or even used as advertising space within the game.

Source: Battle.net

The elusive, pink and rideable Big Love Rocket is one of the non-fungible items from the Valentines' Day event in the World of Warcraft . With the estimated drop rate of 0.03 per cent, it is the lowest dropped item in the game and the chances of catching this suggestively-shaped vehicle are the same as the chances of being struck by lightening once in your lifetime.

Source: WoWHead.

Source: Decentraland

NFT is revolutionising the world of gaming

It isn't surprising that gaming has been described by many as the gateway to the mass adoption of blockchain technology. The gaming industry surpassed both the music and movies industries combined a long time ago in terms of revenue. According to Statista , | a total of 2.81 billion people are playing video games around the world, which represents more than a third of the global population.

So why is NFT such a big deal in gaming? These tokens can help alleviate some issues that game developers and players experience under the current model. For players, the main problem is not owning their digital assets. When they are disqualified or banned from the games, their assets will be lost. If the player wants to sell the digital items purchased in the game, such as the helm, swords or pendulum, the sale of these assets will be restricted b y the developer's company policy. Taking these digital items out of the game is also impossible. That means the players are just borrowing the items at a cost from the game developer.

NFTs can change that. By tokenising the assets, gamers have complete control over their assets . They can take them out from the developers' server into a blockchain network. The security of the assets will also be guaranteed on the blockchain. Players will truly be awarded for their efforts in acquiring the assets as it wouldn't matter if the developers go out of business or the game disappears. Blockchain will ensure that player's assets will still be there. It at the same time opens the door to other opportunities, such as collaborating with other developers so players can transfer assets between games. Developers can also earn extra revenue by charging a fee.

Although the current NFT usage is very much concentrated in the main categories of collectibles, art and gaming, the application of NFTs goes far beyond. With over $100 million dollars worth of NFTs traded and $6 million in just one month. The NFT space is one of the fastest-growing niches in crypto. The NFT ecosystem is disrupting other industries such as luxury fashion, real-world assets and complex financial products, including DeFi lending, insurance, bonds and options. The potential is enormous.

Solving the problem of counterfeiting

Italian designer Angelo Galasso is regarded as the pioneer in the high-end menswear fashion industry and is one of the early adopters leveraging the power of NFTs in the world of luxury. His brand is now in collaboration with acclaimed digital artist - Lee Robinson and technology ecosystem – EdenBase . The team has launched a series of NFTs that comprise unique pieces of digital art, luxury accessories, all individually handcrafted by artisans in Italy, exclusively created for NFT owners. When shoppers buy a piece of Robinson's unique digital art, they will also get one of Galasso's limited edition monogrammed accessories, custom-designed and beautifully handmade, delivered to their door.

Source: AngeloGalasso.com

Delivering a better brand experience

While makers of high-end goods such as Gucci , Chanel , YSL justify their high price-tags by pointing to their pricey materials and craftsmanship, these traits are only part of their value. Luxury is the business of building identity. Buying luxury goods for many is a way to increase self-esteem, create a sense of accomplishments and provide a sense of belonging to the brand culture.

Behavioural science research suggests that shoppers don't buy a luxury handbag because of its incredible utility. Of course, the leather is oh-so-soft, the logo is flashy, and the quality is exceptional. All of these rich qualities are proclaiming the rich status without the owners having to say anything. A digital asset can be copied, but the private key on the blockchain proving the ownership is unique and cannot be replicated or destroyed. NFTs reinforce the scarcity, exclusivity and authenticity that are vital to the perceived worth of luxury goods.

NFTs as collateral in DeFi lending

Currently, the vast majority of DeFi lending protocols are collateralised. It means that borrowers are able to supply NFTs representing a digital asset such as a piece of art, a meme, a digital land or a tokenised real estate as collateral and borrow money against it. Unlike collateral used on standard DeFi borrowing and lending platforms, the value of the collateral can be easily measured by integrating price oracles from multiple liquid sources such as centralised and decentralised exchanges. Due to the illiquid nature, lack of transparency in price movements, and the extreme volatility of the NFTs market, the price discovery process is tricky and measuring the value is challenging.

Imagine if someone buys a HyperDragon for 10 ETH and later uses this dragon as collateral on one of the DeFi lending platforms such as Compound or AAVE, and draws 1750 DAI, assuming that 10 ETH is worth $3500 and this particular NFT has 50 per cent LTV. If no one is willing to buy this HyperDragon , then the market for this NFT is illiquid or non-existent. The only assumption we can make is that this NFT is still worth the same amount as it was last sold for, which is 10 ETH.

Source: Coin Central

In the wildland of NFTs, values can change dramatically in the blink of an eye. To address this problem, some of the projects that offer NFT collaterised loans are adopting the Peer-to-Peer (P2P) Marketplace lending model instead. This space is still extremely early in its development, but in this model, borrowers can offer NFTs as collateral and lenders can choose which NFTs they are willing to accept before releasing a loan. The collateralised NFT is kept in an escrow contract. If the borrower defaults on the loan, the collateralised NFT asset will be transferred to the lender.

One of the companies that use this model is NFTfi . Borrowers can put any ERC-721 token up for collateralisation and other users can offer the borrower a loan. Once the borrower accepts a loan, the ETH gets paid out from the lenders account to the borrower, and the NFT gets locked in the NFTfi smart contract. Once the borrower repays the loan, including the interest, the asset will be returned to the borrower. If the borrower misses a repayment or defaults on the loan obligation, the NFT will be transferred to the lender.

Source; NFTfi

Eye-watering prices in the crazy world of NFTs

We know that crypto cannot do small numbers and NFTs are duly getting on with the program.

In terms of market capitalisation, the NFT industry grew by 17 per cent in 2019 and tripled in 2020. The total value of transactions increased by 299 per cent year on year. According to CoinGecko , the NFT market capitalisation has exceeded its 2020 forecast and reached over $550 million USD.

NFT sales came close to $1 million USD in the first week of September 2020. In the first week of December 2020, $2 million USD worth of NFTs changed hands. As per data from DappRadar , | the trading volume across the top three NFTs marketplaces, OpenSea , SuperFarm and Rarible , came to $342 million USD in February alone this year.

Source: DappRadar

To some people, NFT represents the latest evolutionary stage of cryptocurrency, a new and ingenious way to break from traditional asset classes. To others, NFT is a senseless bubble and yet another way of parting fools from their money.

As the NFT market booms, records are constantly being broken. This year, the market reached new levels of hype after the NFT-based artwork 'Everydays: The First 5000 Days' by Beeple sold at Christie's Auction House for an astounding $69.3 million USD in front of 22 million viewers on 11 March, 2021, setting the world record for most expensive digital artwork sold and the third most expensive artwork by a living artist at auction.

Source: Christies

The craze has driven scores of people to put up their own digital art and tweets for sale as NFTs. Tom Brady is the latest athlete to get into the NFT business by creating his first NFT, even toilet paper companies are trying to ride the NFT wave with Charmin selling its owned toilet paper crypto art called "Non-Fungible Toilet Paper" .

Source: Charmin

Below are some of the other NFT transactions to date that changed hands for truly jaw-dropping sums of money.

CryptoPunk #7804: $7.5 Million USD

CryptoPunks first launched in June 2017 and were developed by a two-person team of Hall and Watkinson , at American Game Studio Larva Labs . They are 24×24 pixel art images that are algorithmically generated. CryptoPunks were released before CryptoKitties . They are innovators in the NFT space and were one of the inspirations for ERC-721 tokens.

Source: Larva Labs

CryptoPunks is currently the most popular NFT art marketplace by weekly and total traded USD volume. According to BraveNewCoin.com , there has been $9 million USD worth of CryptoPunks traded in the first week of April 2021. Noah Davis , Associate Vice President, Head of Digital Sales in the Post - War and Contemporary Art department at Christies Auction House in New York, describes CryptoPunks as | the 'Alpha and Omega of the crypto art world' and says this will be a 'historic sale.'

Source: Larva Labs

CROSSROAD : $6.66 Million USD

CROSSROAD is an NFT created by acclaimed digital artist Beeple and this piece of artwork has been resold on a secondary NFT market for $6.6 million USD on 26 Feb 2021. It features anti-Trump messaging and an enlarged Donald Trump-like figure is lying in a defeated heap with profanities written across his naked body. The artwork was designed to change based on the outcome of the 2020 election. Had Trump won, it would have depicted him wearing a crown and striding through flames.

Source: decrypt.co

NYAN CAT: $590,000 USD

The world's hottest cat is no longer CryptoKitty #896775 - Dragon, which was sold for $172k in 2017. Holding the crown for the 'Hottest Cat in the World - 2021' is proudly the Nyan Cat , a cat meme created by Chris Torres – a quirky flying space cat with an 8-bit rainbow Pop-Tart body, released on YouTube in 2011, sold for 300 ETH, a whopping $590,000 USD in February this year.

Source: decrypt.co

First Tweet by Jack Dorsey: $2,915,835.47 USD

Twitter CEO Jack Dorsey has sold his first tweet "just setting up my twttr" from 21 March, 2006, as an NFT for 1630.5825601 ETH, or the weirdly specific figures of $2,915,835.47 USD, on the NFT platform Valuables . The winning bidder was Sina Estavi , CEO of blockchain company Bridge Oracle , who had held the high bid since offering $2.5 million USD on 6 March 2021. No one seems to know the story behind the weird specific amount.

Source: Live Mint

Is NFT a bubble waiting to burst? Some critics believe that NFT bubble bursting is not a matter of if but when - just like the 'Tulip-Mania' in the 17th Century.

Source: L Boissoneault, Smithsonian Magazine

According to NFT marketplace data monitor NonFungible.com , | the average daily value of NFTs fell from $19 million USD to $3 million USD on 25 March, 2021 – a decline of over 85 per cent on average.

Popular NFT items like NBA Top Shot and CryptoPunks also have seen their average value and number of transactions on the decline since they peaked in mid-February 2021. CryptoPunks , among the earliest and most popular NFT projects for collectors, have seen an over 40 per cent decrease in floor price to 14 ETH.

The price capitulation has led to some speculators liquidating their positions in punks and taking a loss. One speculator has sold a Punk for 16 ETH after buying it for 25.5 ETH and another speculator has sold Punk#8282 , one of the 3840 female punks created, with crazy white hair 27.99 ETH after a 42 ETH purchase.

Source: Larva Labs

In liquid markets, you can see where prices are going every day on open exchanges, but In NFT-land, sellers have slower market reaction due to the illiquid nature of NFTs. There is a lack of price transparency and the general market sentiment is very difficult to gauge . If the market is in a downward trend, instead of sellers adjusting prices downwards every day for a month, forming a trendline, it may be just down 80 per cent overnight.

The price has moved extremely fast in the NFT space, especially from January to February this year. The rate of the increase was so fast that it was almost unsustainable. We all know that Sir Isaac Newton's universal law of gravity that what goes up will come down.

Perhaps the NFT market is experiencing a 'silent crash'. It is perfectly healthy to see a short-term correction. No doubt that the NFT space will continue to grow. Like all collectibles, most of them will be worth nothing, and there will be a tiny percentage worth a lot.

The rise of NFTs in the crypto world has made our wildest dreams come true, virtually.

For pet lovers , they can now own that pet dragon they've always wanted in a virtual cave, and feeding it with virtual edamame. For art collectors , they can now have a digital artwork gallery that fits in their pockets. They can turn their phones into a digital museum that they can take around to show families and friends.

For the famous 8-bit rainbow Nyan Cat , it has meowed all the way to the moon, proving to the world that meme power is real and here to stay. It wouldn't surprise me that in the not-so-distant future, passports, electoral votes, licences, properties, digital IDs, anything that requires uniqueness will be tokenised and given in NFTs.

My 8-year-old didn't get the dragon that promised to rule the planet, but instead, he got three cute dragons that didn't break the bank. He was over the moon that he had these little warriors in his dragon collection that he can train, breed and send to the battlefield. I also had tremendous satisfaction from my very first shopping experience using my crypto wallet. To me, that is a win-win.

Source: Tech Crunch

Some final thoughts

After creating this blog post, I feel like I have just woken up in the Matrix. As much as I love cats, I still wouldn't pay $590,000 USD for a feline, regardless of its colour. Was it an accident, money laundering, or a joke taken seriously by mistake? I don't have the answers. Perhaps the world has completely lost its mind in the space of NFTs.

While some people think that NFT is the biggest technology insanity ever, I am still a firm believer that NFT is going to be incredible and inevitable. Like all crazy inventions throughout history, they are a pre-cursor for innovation. Similar to the world wide web in 1989 and social media platforms in the early 2000s, NFT is not something that will just go away, at least not in my lifetime.

References

Why do we collect things? Love, anxiety or desire, Christian Jarrett, 2014, https://www.theguardian.com/lifeandstyle/2014/nov/09/why-do-we-collect-things-love-anxiety-or-desire;

Christie's announce May auction of 9 CryptoPunk NFTs, Aditya Das 2021, https://bravenewcoin.com/,

Photos Credited By

Cabinet of Curiosities, Domenico Remps, c. 1690, Natural history museu of Ole Worm, Museum Wormiani Historia, 1655,

NFTP: Charmin, 2021

Tulip Mania: Lorraine Boissoneault, Smithsonian Magazine, 2017

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Put a Ring on Him

aleisha@aleishalee.com.au (Aleisha Lee) — Wed, 31 Mar 2021 13:03:32 GMT

Put a ring on him

Aleisha Lee, CPA

31 March 2021 6 minutes read

How styles have changed

Men wearing jewellery is actually nothing new. History tells us that jewellery was worn by many influential men throughout the ages – from the Maharajahs of India and the Sultans of Asia to the royal families of Europe. In the ancient ages of mysticism and the founding of civilisations, jewellery played the important roles of imbuing magical powers and signifying leadership. From the signet ring of the pharaohs to the single large drop pearl erring worn by Charles I of England, jewellery was served as symbols of power, wealth, abundance and status. But it has never been as mainstream as it is now. The rise of social media stars, influencers, celebrity culture and the growing cohort of young and fashion-fluent men are shaping the way men dress and accessorise.

Living in the 21st century, we are seeing men adorning understated pieces of jewellery that don’t take away from their personality but, in fact, add to it. Instagram images of gorgeous men wearing gorgeous jewellery is just so exciting to look at and is enough to make a girl like me drool. Style icons like David Beckham, Brad Pitt, Johnny Depp, Ryan Gosling, Justin Bieber, and Jay-Z, just to name a few, are making a serious case for men’s jewellery and sparking prominent trends in accessorising among the fashion-savvy male population and fuelling the appetite for male jewellery pieces.

If David Beckham wears a new bracelet and shows off a new tattoo on social media, it quickly gets filtered through to the fashion-conscious and trendy millennials and they want to emulate him. In fact, David Beckham made headlines in 2003 when he was spotted wearing a £20,000 diamond and platinum studded earrings.

Alessandro Michele , the creative director who has re-invented Gucci by bringing glitz, glam and expression back into luxury Italian fashion house is also leading the trend for men wearing more and more jewellery. He is known for wearing multiple rings on his fingers and chain on his neck. At one of the interviews with American Vogue, the eclectic designer was observed wearing no fewer than eleven rings on his fingers.

Embracing the new trend

Luxury fashion labels such as Bottega Veneta , Saint Laurent , Versace and Givenchy , have already made forays into the men’s high-end jewellery category in recent years with extraordinarily handcrafted pieces that act as an important finishing touch to any outfits. More and more brands and retailers such as Tiffany & Co , Harrods London and Barneys New York are also giving men’s jewellery dedicated space and special sections in-store.

Tom Kalenderian , Executive VC and General Merchandise Manager at Barneys New York said in an interview that | “Our men’s jewellery business is a key growth area in what has become an overarching strategy for Barneys to grow the men’s accessories business. The new-found interest in men’s jewellery is a lasting trend; I see growth potential and a need to continue to challenge our buyers to find new and exclusive designs to satisfy demand from this sophisticated consumer,”

Design that reflects individuality

Unlike the stererotypical male jewellery, designers are creating inventive pieces that blends well with modern men’s lifestyle. From two-tone chain bracelets and logo-engraved cufflinks to chunky black diamonds studded rings, the designs are often ridged, fluted, faceted, and made of titanium, texalium, forged carbon, meteorite, chrome and other natural metals and minerals that represent masculinity and strength. For those fine men wanting to add some understated sparkles to their style, the pieces are often accented with black diamonds, black spinels, obsidian and onyx to add a subtle dazzle. The look is urban, robust and effortlessly chic. The style radiates a strong masculine energy.

| According to a Grand View Research report, "the global jewellery market may grow at a compound annual growth rate (CAGR) of 8.1%, reaching US$480.5 billion in value by 2025. (noting that the report is optimistic about the industry’s ability to recover from the COVID-19 pandemic.)" Whilst it is unlikely that the men’s jewellery market will truly compete with the women’s anytime soon, there is no denying that this segment of the market is becoming increasingly important.

| Fashion search website Lyst , reported that searches for men’s jewellery "have increased 23% in 2020 compared with 2019" .

| NPD Group – a leading market research company, also reported that | “Millennials are driving men’s jewellery sales, generating half of the growth, followed by Gen Z and Gen X.” Research data also shows that rings are the hottest item in the men’s jewellery sales around the world.

Take diamond rings as an example, they were traditionally a symbol of ‘forever love’ and signifies commitment. Nowadays trendy men are wearing them as a fashion statement, a self-expression that reflects the personality and attitudes. Further data shows that rings generate one-third of the men’s jewellery sales and almost two-thirds of the industry growth and closely followed by necklaces and chains which represents one-quarter of total sales.

Some final thoughts

Jewellery is universal, it’s an expression of uniqueness, a reflection of individuality, lifestyle, tastes and even income. For some men, jewellery is a very important fashion statement and an epitome of style and sophistication. Although men’s jewellery is still in the early stage of its development, however, it has become an increasingly dynamic and valuable market. While most jewellers are still female-oriented in their designs, product offerings and customer service. Innovation and personalisation haven’t yet caught up with the male consumers’ evolving demands and there are only a few products that fit their needs and desires. It is therefore leaving a great opportunity for jewellery houses to capture a larger market share by renewing their brand positioning and being more creative.

Time has changed in the world of jewellery and it’s clear that diamonds aren’t just the "girl’s best friend".

References

Global Jewellery Market, M Shahbandeh, Feb 2021, https://www.statista.com/topics/5163/jewelry-market-worldwide/

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Daigou 2.0: the Transition From Hessian Shopping Trolley to Omnichannel Sales Model

aleisha@aleishalee.com.au (Aleisha Lee) — Mon, 01 Mar 2021 01:31:02 GMT

Daigo 2.0 - the transition from hessian shopping trolley to omnichannel sales model

Aleisha Lee CPA

1 March 2021 | 7 minutes read

G one are the days when international university students and Chinese aunties with hessian shopping trolleys sweeping baby formula off the shelves while frantically WeChatting their buyers in China to finalise the transaction, choking up almost every Chemist Warehouse store, making parents furious over baby formula shortages. Desperate mums like myself had to scour pharmacies, supermarkets, Kmart, Big W, eBay, Amazon, you name it, for a tin of organic infant formula for my baby boy. It was an ongoing struggle until the coronavirus pandemic hit our shores and government closing the border to all international travellers. Overnight, it upended inbound tourism and disrupted the entire Daigou ecosystem and the logistics network.

Australian products such as milk, honey, wine, health supplements, UGG boots and baby care are sought after in China, thanks to the ‘clean’ and ‘green’ reputation of Australia, high quality and safety standards. The emergence of an affluent middle-class of seeking more ‘international’ products has also fuelled the enthusiasm for Australian products. Chinese consumers are generally highly brand conscious, parents are willing to buy expensive baby products given the strong association of price with quality. Back in the golden days, a tin of baby formula cost an average of $28 in Sydney, the same product could be sold for up to $100 in China. Taking out the international shipping for a 900g tin at approximately $32, Daigou would net a very impressive profit of $40 per tin. Daigou profits usually come from price arbitrage and sometimes from product scarcity.

What is Daigou?

‘Daigou’ - Chinese for ‘buy on behalf of’, are buying agents, personal shoppers. Usually they are friends and families, or friend of a friend who has direct rapport and personal trust with the clients in China.

AuMake , a Daigou specialty business listed on ASX, told ABC News that "the Daigou market is worth at least $2.5B in Australia." While it is almost impossible to put an exact dollar figure on the size of the industry but Daigou is a global phenomenon and we know that Daigou is big business.

2020 has been a life-changing year for everyone living on this planet. From getting used to wearing a mask in public to losing love ones to the virus. It was truly devastating. Before the pandemic, there were an estimated 150,000 Daigous scattered across Australia and about 1,000 Daigou stores catering to the Chinese demands for Australian products, now most of them are permanently closed.

Impact of the Daigou exodus

At the beginning of 2020, the Chinese economy shrank for the first time since the end of cultural revolution in 1976, ending a near half-century economic growth. There has also been a shift in consumer behaviour for imported products in China. Travel restrictions and disruptions to logistics network in the wake of the pandemic had serious effects on a slew of Australian companies relying heavily on doing business in China through the traditional Daigou sales channel.

Orders for Australian-made products plummeted to an unprecedented level and the Daigou industry almost vanished. Blue Sky Express – a major logistic provider once claimed to have a market share of more than 60 percent of Daigou trade in Australia, went into liquidation in May last year and thousands of parcels remain missing still.

A2 Milk Company , a New-Zealand based company dually listed on both ASX and NZX, a one-time market darling, had its market capitalisation sinking over 50 percent in just 6 months to just AU$6.5B. Documents lodged with ASX have revealed some very negative news. The company has heavily downgraded the full-year outlook after disappointing half-year results with earnings falling over 32 percent due to disrupted Daigou trade. Investors continue to hammer the stock and the share price has plummeted from its all-time high of AU$20.05 in July 2020 to just AU$8.77 at the time of writing this post.

Swisse vitamins also suffered a 36 percent slump in revenue to AU$127M in Australia and New Zealand.

Another ASX-listed Daigou specialty business that are bleeding is Mediland Pharm . Share price has so far lost two-thirds of its original IPO value. The company has shut down all of its retail operations in Australia and placing its subsidiary companies into administration. According to its latest ASX announcement, the company has reported total revenue of AU$727K, a whopping 96 percent drop from the same period last year and it has also reported a loss of AU$5.5M across the group.

As Daigou sales dry up, Bubs Australia is also feeling the pain. Bubs Australia is a goat milk infant formula company. In the latest financial reports, the company has reported an EBITDA loss of AU$14.4M and gross revenue tumbled 33 percent in the six months ended December 31, mostly due to the collapse in the Daigou sales channels.

Daigou 2.0: transition to omnichannel sales model

To revive the industry, it needs physical foot traffic, inbound tourism needs to resume and international students need to return. On 2 March, the government extended the international border ban until June this year, citing the emergence of a highly transmissible variant of Covid-19. Although Australia is slowly returning to the new normal and a lot of places are no different to what it used to be before coronavirus. There are signs that some of the retail Daigous are returning, packing the car boot full of baby formulas. But most of the retail Daigou shoppers that would empty shelves at the supermarkets and pharmacies have already transitioned to e-Commerce and social commerce in order to stay in business.

Omnichannel is a fancy way of saying smooth shopping.

Daigous are now engaging in social sharing and social e-commerce. They are transforming themselves from being Daigou shoppers to social media influencers and brand promoters. Those with warehouses are also upgrading their industrial premise to live streaming studios in order to connect Chinese consumers and Australian brands.

What is social commerce?

Social commerce involves buying and selling products through social media networks. It is the added ability on social media platforms to purchase products without leaving the app. The buying decision is based on opinions within the social network and consumers rely less on information provided by the brands and advertisers. It is about discovering products with friends and families, sharing that shopping experience and buying on the same platform.

With the rise of major social commerce platforms like China’s Pinduoduo, Tmall Global, Kaola, Xiaohongshu (Little Red Book), WeChat’s Good Product Circle, together with the emergence of a new consumer class in China – the affluent, sophisticated and tech savvy millennials, have fuelled the growth of the social commerce revolution. Latest research by eMarketer says that "the social commerce market in China accounts for 11.6 per cent of total retail e-Commerce sales, totalling US$186B in 2019 and is estimated to be worth US$474B by 2023."

Vincent Digonnet , Executive Chairman of Asia Pacific at Razorfish , a global leader in digital marketing innovation and a full-service agency offering strategic, creative, technical and media solutions has made a conclusion that "China is a decade ahead of western countries in e-Commerce" .

'The Perfect Overlap"

| Firstly, there is a perfect overlap between the population of social media and consumers with purchasing power, and that overlap that doesn't exist in western countries because in the west, general population on social media is less than 25 years of age and people with money are often more than 55 year of age. In comparison, people on social media in China are older and people with money are younger.

"Chinese are massive content creator"

| Second contributing factor is that the Chinese are massive creator of content, according to Vincent . In western countries, statistics show that only 1 out of 100 people would create the original content, while 9 people would retweet and the rest of the 90 people are purely spectators. While in China, the statistics suggest that 30 out of 100 people are genuine creator of content, 50 people retweet, comment those contents and only 20 out of 100 are passive spectators.

These are the two main reasons why China is 10 years ahead of western counterparts in e-Commerce.

| In 2020, according to Statista, “the revenue of e-Commerce in China is expected to show an annual growth rate (CAGR 2020-2024) of 6.9 percent, resulting in a market volume of US$1,309,535M by 2024.”

In Australia, some digital marketing and consulting companies are rebranding themselves as corporate Daigous. These companies recruit retail Daigous as individual distributors and subcontractors on their corporate platforms by managing and streamlining the entire process of product procurement, delivery, and other logistics and administrative issues on their behalf. The retail Daigous don’t have to outlay any money to buy the products before re-selling them. Every part of the transaction is handled by the corporate platform.

Responding to the 55 percent decline in daigou channel sales, Bubs Australia has adapted new sales channel that includes online to offline (O2O), livestreaming e-commerce and social selling, as well as offering delivery from Australia or from Chinese warehouses directly to consumers, in an effort to revive dwindling sales.

AuMake has also joined the trend on the social commerce. The company launched an online marketplace that aims to connect Australian brands to Asian influencers and their social networks while providing influencers with lower prices for their fans. Brands that have taken initiatives and embraced the new e-Commerce and social commerce revolution included Kabrita, Karicare, Nuchev and Karihome , while some have not yet responded to the emerging trend.

Some final words

The coronavirus pandemic has shaken up the Daigou industry. Although there are signs that Daigous are returning and momentums are picking up, however, the future of traditional Daigou trade will never return to pre-Covid levels of activity and will continue to face a period of unprecedented challenges. The shakeup is an elimination process that eradicates companies with operational and management deficiencies and are failing to reshape and adapt, but companies that can move along with the revolution and are responsive to new alternative ways to command engagement and build strong connections with consumers will survive and thrive in the post-Covid 19 world. Like the old famous phrase by British economist Herbert Spencer – ‘Survival of the fittest’. And it’s so true.

References

Patrick D, The Daigou channel is different, not gone, AFR , Nov 2019, https://www.afr.com/companies/retail/the-daigou-channel-is-different-not-gone-20191106-p537ze

Bang X, Chinese personal shoppers and Australian brands devastated by the impact of coronavirus, Oct 2020, https://www.abc.net.au/news/2020-10-17/has-daigou-disappeared-in-australia-during-coronavirus-pandemic/12761376

Dean B, Coronavirus to have “significant” effect on economy, daigou trade, Insider Retail , Feb 2020, https://insideretail.com.au/news/coronavirus-to-have-significant-effect-on-economy-daigou-trade-202002

eMarketer, Sep 2020, Coronavirus Impact: Share of Luxury Goods Spending Among Luxury Goods Buyers in China, by Channel, 2019 & 2020* (% of total), https//eMarketer.com

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