“Fintech Chanakya” Shibabrata explains buyer’s shift towards “Lipstick Effect” Post COVID
Despite the alarming panic and wreckage caused by Covid-19 and the irrevocably changed world, the
financial growth has continued for an array of companies providing services in payment systems like
the London based Fintech Start up PayQ, offering peer-to-peer lending, equity crowdfunding and High
risk merchant account.
Fintech connoisseur Shibabrata Bhaumik says, “making predictions at such uncertain times of crisis is a
mug’s game. However for the coming few months, consumers may forego big-ticket retail purchases,
but may go for reasonably priced indulgences, or what is called as ‘Lipstick Effect’. It’s an economic
barometer that can indicate how consumers might behave amid a bruised economy. Consumer will
show a tendency to compensate by buying more high-end versions of lower-priced items. There may
not be enough on the card to buy the Prada dress, but consumer will still feel good about buying those
modestly priced Chanel cosmetics”
The Lipstick Effect occurs during financial slowdown or economic downturns when consumers
continue to spend their money on small indulgences during recessions. They may not have enough to
spend on big-ticket luxury items. However, most still manage to spend the money to purchase small
luxury items, such as premium lipstick. The Lipstick Effect has been invariably experienced in markets
during economic depressions, and now should be no different for the coming few months at least, he
says.
The interesting learning from the lipstick analysis is that even during a downturn, brands that families
trust are not jettisoned. In fact, they end up being treasured and looked at with more love and nostalgia.
But in troubled times, such brands need to remain visible.
The “Fintech Chanakya” Shibabrata simplifies further “As a result of the Lipstick Effect, the lady of the
house will always show loyalty to a loved brand on an occasion like a family anniversary dinner, and is
likely to pick Amul Mawa Malai or Caramel Cookie at Rs 400 a brick as opposed to the usual vanilla at Rs
250. Such small indulgences are meant to make the family happier. Thus, in times of economic distress,
good brands can actually expect to up-sell, despite the strong headwinds.”
With increase in the number of digital transaction and social distancing rules in place Fintech
Companies are gently pondering their portfolios. Shibabrata Bhaumik, the founder of PayQ and The
Fintech Guru says, “Online Payment System are seeing a multi-year acceleration to digital banking,
digital finance, and digital commerce. There are a lot of reasons why Fintechs are seeing increased
usage amid the pandemic. People can no longer transact with cash so they are turning to peer-to-peer
and digital payment platforms to send money to friends and family and with social distancing rules in
place, Fintech Companies are booming like never before”
Fintech futurology is judiciously harmless profession; investors and sages could meander along
expansive avenues of opportunity, gently pondering their portfolios, window shopping and occasionally
diving in to snap up the latest trends.
Shibabrata Bhaumik explains the simple epidemiology of payments and his expansion plans for his
award wining start up PayQ . He says “PayQ have recently extended their operations in Asian countries
in Q1 and Q2 of 2020 and have seen a usage surge. We have also stepped up our self by offering peer-to-
peer lending for existing and new merchants whether it’s small businesses that need help against
COVID-19 as a relief funds or existing Big Merchants who want access to their stimulus checks earlier.
He says “ we are committed for helping small businesses, advance their potential and get them geared
up and reestablish them back to the market.”
