Going forward, I’m planning on publishing posts with assorted links of interest under the headline “Tidbits”. Makes it easier to create lightweight thoughts while I wait for bigger ideas to finish baking.
A couple of items that almost slipped by during the Alibaba Single’s Day hullaballoo…
About 24% of U.S. retailers say they plan to run promotions for Singles Day, Adobe said, after conducting a poll of 402 U.S. retailers that do annual sales of more than $500,000. That will include deals on Alibaba’s platforms in China and on retailers’ U.S. websites. Former Snap exec Imran Khan’s new fashion website Verishop, for example, says it will be running a sitewide sale of 25% off.
Alibaba says participating global brands include Apple, Estee Lauder and even some younger start-ups such as sneaker maker Allbirds, which is using the event to highlight a new ad campaign on sustainability.
Incredibly interesting that many US retailers are doing promotions on their US websites during Single’s Day.
I continue to believe that the ecommerce market is converging globally. Historically, retail markets have been geographically isolated primarily because retail channels were tied to physical space. But with the advent of ecommerce, consumers can shop anywhere. And the brands that consumers like are global in nature. Therefore brands will prefer to cater to a global audience when/if possible.
And as I’ve argued before, Alibaba could be a credible challenger in the US if they can consolidate and shrink global supply chains and delivery chains. I found this interview by Wan Lin, Cainiao (Alibaba’s delivery company) President, to be incredibly fascinating given the significant progress Cainiao has made in outbound deliveries:
Global cross-border parcels from the Chinese market accounted for 38%, of which 60% were handled by the Cainiao logistics network platform.
In terms of exports, the cross-border orders handled by Cainiao and partners on Double 11 also exceeded 30 million orders, a year-on-year increase of nearly 60%, which is equivalent to 10 times the average daily cross-border parcel volume in China.
The two most important stats: 1/ Cainiao already handles 60% of China’s outbound cross-border parcels, and 2/ On Single’s Day (Double-11 or 11/11), Cainiao handled >30 million orders.
For perspective, UPS’ average daily global delivery volume in 2018 was 20.7 million.
Those that know me personally know that I’ve been very excited about Alibaba’s prospects for a long time, even when Alibaba was shrouded in controversy back in 2015 after the IPO crash as investors questioned Alibaba’s ability to fend off a growing JD and an untouchable Tencent/Wechat. With hindsight, it’s clear the market missed the forest for the trees…and in many ways, I think the same thing is happening with Activision Blizzard.
The market is looking for the trees and will ultimately prove too narrowly focused on trying to forecast the next hit. They are missing the whole IP forest and the esports forest. They are looking for a future that looks like and rhymes with the past. But the future looks different and will likely prove to be far brighter and richer.
How much better?
“We have 350 million users in 190 countries,” Kotick said. “I see no reason that number shouldn’t be 1 billion in five years.
There are just a few companies globally with a 1 billion+ user base today: Apple, Google, Facebook, Tencent, maybe TikTok / Bytedance and maybe Alibaba. There might be a couple more, but the list isn’t long.
Activision could be one of those. And mobile will help it do it. And the impact on financials will be far greater because the vast majority of those 350 million users today are playing Candy Crush, which is a fairly weak title even if widely played. Core IP today commands less than 100 million users. Getting to 1 billion would be big.
Ecommerce took a while for people to understand mainly because older folks couldn’t understand the appeal of buying something without touching it. In a same vein, many folks today that do not have teenagers (in particular, boys) will find it hard to understand esports. These gaps in cultural observation and understanding can create significant investment opportunities.
Along with the two mentioned above, one that likely continues to baffle the average investor is likely the dating habits of millennials and Gen Z. TikTok, Snap, and Match are three companies that really seem to get millennials and Gen Z in my mind.
Which is why I found Tinder Swipe Night to be A+:
“The Lens was built specially for Swipe Night to recreate for Snapchat users the swiping experience from the new interactive show,” Tinder says. “Each directional swipe will bring the user to a different Snapchat experience, depending on their choice.”
The lens will arrive along with the six-episode series Swipe Night, which debuts On October 6th at 6 PM with a new show coming every Sunday. Tinder calls it an “apocalyptic adventure” that puts you into a first person role as a member of a group. At key points, you’ll need swipe left or right to make choices that will drive the direction of the plot, with only seven seconds to decide. Your decisions will apparently have real-life consequences, as they’ll be added to your profile so matches can see how you’d handle a disaster.
Tinder is directly targeting Gen Z with the experience, calling it “an entire experience that speaks their language. Snapchat is already popular with that demographic, and by teaming with the social network, the company no doubt hopes to tempt non-users to download its dating app.
Dating is quickly moving online. It’s more efficient. It’s more immediate. It’s more natural for the generation that grew up mobile-first. Dating in bars is starting to become weird. But it’s not that hard to understand – By the time Gen Z is old enough to enter a bar, they will have already lived 10+ years with a phone and between 13 to 21, online dating is realistically the only option besides school. But profiles are blasé. This is also the generation that grew up with Netflix and a lot more video games. Swipe Night is made for them. I think too many investors continue to underestimate what Match will be able to accomplish in the coming years.
Disclosures: I own shares in BABA and ATVI. I have no intention to transact in the next 48 hours.