50%+ Drop in China’s ‘Singles Day’ Sales, 4 Hr Lines for Dobrik’s Pizza, and Disney & Netflix’s Content Experiments

November 18, 2022 by  wearerockwater

What We’re Reading

4 articles + RockWater analysis to make you a better investor and operator. Today we discuss the 50%+ Drop in China’s ‘Singles Day’ Sales, 4 Hr Lines for Pizza from David Dobrik, and Disney & Netflix’s Content Experiments.

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E-Commerce Giant Alibaba Reports Weak Singles Day Sales Growth
Wall Street Journal, 11.11.2022 

The RockWater Take by Chris Erwin

China’s 14th annual shopping festival was last week.
The news strikes a different tone from prior years…

KEY HITS

🔸 2022 was the 14th year for the “Double Eleven” festival on 11.11
🔸 For the 1st time sales results weren’t announced by Alibaba Group and JD.COM
🔸 Signals a depressed consumer sentiment from an aggressive Zero-COVID policy

FINANCIAL DATA

🔸 In 2021 Alibaba did $85B of GMV on its Singles Day, up 8.5% YoY
🔸 For 2022, Syntun estimated Alibaba and JD.com were 61% and 27% of total day sales, respectively
🔸 Syntun also estimates $43B of Chinese online spend last Thu / Fri, though that doesn’t seem to foot with historical data. That would imply a 50+% drop if JUST Alibaba did $85B in 2021
🔸 China’s overall retail sales grew 2.5% in Sep YoY, versus 5.4% for Aug figures. Mkt growth is de-accelerating

CHINA CONSUMER DATA

🔸 Unemployment among young people was 17.9%
🔸 A survey found 24% of respondents didn’t plan to participate in Singles day discounts, VS 12% in 2021 and 6% in 2020…wowza!

KEY TAKEAWAYS?

🔸 China’s economy growth slowed from Zero-COVID policy. So last week the China gov signaled a loosening of restrictions to boost economic output. China’s consumer has a tough road ahead, as they’re also dealing with massive real estate declines

🔸 China is a much more mature ecom market than US, which has much more headroom for ecommerce growth. But the global consumer is clearly hurting, which will slow overall retail spend. It could also slow adoption of new consumer journeys like livestream commerce, since platforms will reduce new product investment to focus on “core” businesses…OR it could drive higher adoption as consumers find alt ways to shop and save, but recent analysis shows livestream shopping is a longer slog in US than originally anticipated

🔸 Ecommerce platforms must newly focus how to save consumer $$. Explains why co’s like Walmart just recently announced increased pressure on suppliers to reduce pricing. Expect changes in supplier negotiations, supplier product selection (luxury will take a hit), new discounting and consumer messaging strategies, and supply chain efficiencies to pass along to consumer pricing

 

Some reader chime-in: 

 

Andrew Spalter: This year’s 11/11 was definitely more downplayed compared to previous years. Something I noticed that was not included in the above was the National Congress which wrapped only a few weeks ago. From our team on the ground in the market, as well as our global team, we’ve all noticed a slow-down period across the board from consumerism to marketing to campaigns across a majority of 11/11 heavy brands.

Here are a couple of great articles for reference:
Jing Daily – https://jingdaily.com/double-11-alibaba-tmall-jd-douyin-consumer-trends/
Pandaily – https://pandaily.com/subdued-singles-day-reflects-chinas-evolving-e-commerce-sector/

Funny enough, both don’t mention the Congress but are each largely structured around your takes Chris Erwin.

 

Ben Grubbs: YouTube Shopping is rolling out new programming this week, starting with the creator LARRAY on Nov 14, for its #fromyoutubetoyou program.

On Sep 20, the Chinese creator Li Jiaqi (“Lipstick King”) returned to Taobao after a three month absence. His two hour show had 63 million viewers tune in. I heard from a source in the market that sales topped 20 billion RMB (USD $2.8B).

That works out to an average of $23M in sales every minute. Or $44 in sales on average to every person tuning in.

An equivalent order size is doable in the US market. Reach and viewers is an issue. The equivalent audience in the US to what Li attracted on Taobao, would be 18 million people on YouTube.

I’m not sure how much Taobao firehoses viewers to a specific live stream. On YouTube, you have to navigate and find their Shopping hub to know the LARRAY live stream exists. How many people know how to find that hub?

 

Jonathan Heeter: The fragmentation of Chinese e-commerce across more platforms also took a big bite out of baba. Pinduoduo, especially, has taken share from value priced goods and commodities, which have been the cornerstone of T-Mall’s turnover.

 


The Latest Disney+ Trend: Short Sci-Fi for the TikTok Generation
Axios, 10.26.2022

The RockWater Take by Michael Booth

The Walt Disney Company is experimenting with Quibi redux. Think this can be successful as a content format for a diversified premium content platform like Disney+. 👇🏼👇🏼

Netflix’s insight from a few yrs back was prescient:

“There are thousands of competitors in this highly fragmented market vying to entertain consumers… Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose.”

Short form content is dominating screen time for younger generations. Build content that fits their consumption habits.

 

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David Dobrik is Opening a Pizza Place Called Doughbrik’s on November 12
TubeFilter, 10.25.2022

The RockWater Take by Alex Zirin

Step aside MrBeast Burger… there’s a new creator in town.

More than two years post-initial announcement, the pizza shop from David Dobrik, DOUGHBRIK’S Pizza has come to Sunset Blvd.

After Donaldson & Co. launched Beast Burger this summer, every creator economy newsletter seemed to tout that “traditional businesses were dead as we knew them,” and “future commerce success would be dominated by the creator industry.”

While I’m sure there is meaningful revenue to be had for certain creators, I’d take the under on that claim.

Creators are some of the best marketers in the world, full-stop.

However, for certain products and ESPECIALLY food, marketing can only get you so far.

Sure, I might try pizza from Dobrik once. But if the product is inferior to another restaurant that I have easy access to, I’d be very unlikely to return. Fool me once…

Dobrik’s launch may not seem like the bellwether that MrBeast Burger was, but I felt that its success / failure could say far more about the future of creator-led brands… Turns out, Beast isn’t the only one who can pull big crowds. Doughbrik’s opening touted 4-hour lines and massive traffic in the heart of Hollywood.

However, one question remains… does this say more about the success potential of creator-led businesses, or say more about Dobrik’s success? If you ask me, it’s likely the latter.

 

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Chris Rock to Make History with Netflix’s First-Ever Live Global Streaming Event
CNN, 11.10.2022

The RockWater Take by Eric Kenigsberg

After adding 2.4M subscribers in Q3 following multiple declining quarters and showing some life despite increased competition in the OTT space, Netflix continues to innovate in hopes of silencing doubts about its user acquisition.

Most recently, Netflix announced its first globally livestreamed special airing in early 2023 featuring comedy legend Chris Rock.

First of all, a comedy special is a fantastic GTM for livestreaming given that half of the platform’s global subscribers watched a standup special in 2H’18-1H’19 (wish there were more recent stats!)

Secondly, it’s important to note that Netflix can take the new content format in many directions. Two that come to mind are sports and livestream shopping.

Netflix has long been rumored to enter the live sports market and just a few days back, a Deadline article confirmed that Netflix has been bidding on media rights, hunting for the “right league, right deal”. Experimenting with the platform’s livestreaming infrastructure and tweaking through a series of specials is the right move before transitioning to live sports programming, where diehard fans won’t let repeated glitches slide.

As for live shopping, Netflix has a ton of IP that it has created merch behind. Think Stranger Things or Squid Games. Fans love seeing behind-the-scenes content and livestreaming can be a way to provide them that while creating an additional awareness and sales funnel for merch.

The flexibility of livestreaming and the opportunities to create meaningful engagements with fans is the reason the team at RockWater has been strongly encouraging our production clients to pursue livestreaming as an expansion content format.

Feel free to reach out to anyone on the team to hear more about our take on livestreaming and why it was much more than a pandemic fad.

 

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If these insights are relevant to projects you are thinking through, ping us at hello@wearerockwater.com. We’re always excited to riff through ideas!

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