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International eCommerce / Time: It’s clear that the CCP under President Xi will not countenance any challenge to its authority. Given a slowing Chinese economy and mounting geopolitical headwinds, Beijing is nervous about systematic financial risks and rising debt. This is no time to be calling, as Ma did, for a loosening of the system. And just as seemingly unassailable titans of real estate, finance and show-biz previously discovered, China’s tech champion is learning that loyalty comes first in Xi’s China.
2PM Analysis and what to know:
- Ma has not been seen in public for several weeks, and most recently missed a scheduled appearance to film an episode of his own entrepreneurial talent show.
- The potential disappearance comes as Alibaba and Ant Group are both under investigation for monopolistic practices in an antitrust probe. Ant Group’s November IPO was pulled in the last hour by Chinese regulators as the financial group has been pressured to refocus on its core payments offering.
- Alibaba, meanwhile, is facing scrutiny for alleged anti-competitive contracts for merchants that forbid them from selling on other platforms.
- In late October, Ma openly criticized China’s regulators, accusing them of stifling innovation, and referred to the country’s banks as “pawnshops.” Following the comments, Ma was summoned for questioning by Chinese authorities.
The implications:
It’s hard to understate the magnanimity if Ma is missing. Worth $48.2 billion, Ma is one of the world’s richest men, having led Alibaba to become the country’s most influential tech company. It’s also integral in bringing in international brands to do business in China. Its e-commerce platform Tmall has become a key partner in reaching the Chinese market for everyone from Gucci to Snickers. In the fallout of the pandemic, retailers were looking to China all the more eagerly in order to recoup lost sales from the year in the place where spending was rebounding the quickest.
In 2020, Alibaba joined Richemont and Kering controlling group Artemis in an investment in luxury marketplace Farfetch. Also last year, Shopify joined forces with Alibaba-owned payment platform Alipay to facilitate seamless payments in China. In a statement, Shopify vp of product and merchant services Kaz Nejatian said that reaching consumers in Asia is an enormous growth opportunity for its merchants.
What happens next to Ma could change the pace and the makeup of US companies like Shopify’s business outlook in China. There is no equivalent course of action in the US, and Chinese relations have been turbulent in recent years. In all, founders are in a tough spot: growth in China is a critical rebound mechanism, in a country where control is paramount.
Summer Sentiment: Post TikTok debacle, Alibaba sentiment shifted negatively. The latest development stands to further complicate Alibaba's image in America.
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DTC Brands / New York Times: Parade was founded in 2019, just months before the U.S. economy shut down in March, by Cami Téllez and Jack Defuria, two friends in their early 20s. As most fashion companies struggled to keep afloat, Parade sold over 700,000 pairs of underwear and brought in $10 million in revenue, according to a company representative.
DTC Power List Member: No 274 (paywall)
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Retail / Nate Poulin: While the retail world runs screaming from the blaze that is Mall retail in the United States, a powerful trio appears to be running in the opposite direction, prepared to fan the flames and ready to restore the best parts of the American Mall complex to their former glory.
Editor's Note: this may be one of my most useful retail threads of the last year. He did quite a bit of research for this one.
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eCommerce / Axios: Confined by stay-at-home orders, people have discovered that getting a new car delivered is as easy as ordering groceries or takeout. Experts say they may never visit a showroom again, with consequences that will reverberate on every Main Street in America.
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Data / eMarketer: While the majority of YouTube viewing still happens on mobile devices, it has steadily shifted to CTV screens and away from mobile over the past year. In Q3 2020, OTT/CTV accounted for 34.4% of time spent with YouTube, up from 27.0% in Q4 2019, according to data from digital talent network Collab, which launched media sales last year. Meanwhile, the share of time spent on mobile devices has steadily fallen quarter over quarter, from 49.0% in Q4 2019 to 40.9% in Q3 2020.
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DTC Brands / Reformation Partners: Seeing that today’s most iconic brands did not raise VC conveys a different insight: that deliberately taking a slower approach to brand-building is a prerequisite (though not guarantee) for building a long-lasting consumer product brand. Stated differently: Blitzscaling is not a viable option for iconic brand-building: brand is earned, not bought.
Editor's Note: Correct.
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The Passion Economy / Hunter Walk: Being a modern creator is, for many, exhausting. The falling economic costs of production and distribution have been replaced by a new set of taxes — physical, emotional, psychological — as your community expects new content, accessibility to their heroes and open book authenticity. Paired with the social media platform algorithms, which in themselves reward frequency and engagement, this combination saps joy and agency from the creative process and burns out the creators. Having to perform 24/7 comes with costs, and that’s only dealing with fans let alone the trolls.
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eCommerce / Fortune: Hive is a digital marketplace for premium sustainable goods. The company follows a strict set of criteria before allowing any brand or product on the platform, a process known internally as the “Hive Five.” The cofounders (all retail alums from Freshpet, Casper, and Jet.com) were frustrated by the heavy lifting consumers had to endure to actually find, evaluate, and decide whether one brand or product was better than another.
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Additional reads to bookmark for the week:
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Brands / Ad Age: The turbulence of 2020 might have at times dampened our spirits, but it’s clear from looking back on the past year that creative ideas only flourished under all the strife and restrictions that upended our lives. Here, [Ad Age] revisit the strongest, most entertaining and most expertly executed brand moves of the last 12 months.
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Advertising / Financial Times: Amazon’s “other” business unit, which is made up almost entirely of its ads business, is growing faster than its retail, cloud computing and Prime subscription divisions. According to FactSet, a financial data company, Amazon’s “other” unit will make $21bn in revenue in 2020, a 47 per cent jump on last year. Its rapid growth is helping Amazon to chip away at online advertising’s dominant player, Google.
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Deep Generalism / Saturday Evening Post: Winton was a bicycle maker, and as he writes below, he soon became infatuated with the idea of a bicycle that “a rider wouldn’t have to push and keep pushing.” In 1896, he founded the Winton Motor Carriage company, and soon began turning out cars at the dizzying rate of four per year. He would sell his first car in 1897 — arguably the first automobile sold in the U.S. — for the princely sum of $1,000.
Editor's Note: We are in the same phase of American innovation that saw horse and carriage owners scoff at automobile manufacturers. This analogy can be applied across any industry. Now compare this essay to the current commentary on department stores vs. eCommerce and movie theaters vs. in-home box office debuts.
A thank you to Damian Soong (Form Nutrition CEO) for finding this one.
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Take a moment to study the brands that bridge the past and the present: the Nikes, the Coca-Colas, the Fords, the Apples. Not one brand story is the same, and in many cases, best practices didn’t apply. There’s no common playbook to be found.
If there was a playbook to follow, the teams of these companies would be bold enough to disregard it. When building a generational brand, leaders account for changes in terrain, global politics, trade policy, marketing rules, and advertising strategies. For them, today’s playbook is tomorrow’s waste and tomorrow’s playbook is just as useless. To make it to the five, 10 and 20-year milestones, there is only today, every single day. What usually begins as one or two founders becomes a team of individuals who thrive on one shared reality: there isn’t really a playbook. There are only daily adjustments and proper anticipation.
Click through for the "playlist"
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