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Alibaba Smashes Records with $38 Billion Singles’ Day Sales, Nike Pulls its Products from Amazon, Launch of Disney+ and more
Alibaba Smashes Records with $38 Billion Singles’ Day Sales; Ferrari To Limit Licensing in Bid to Bolster Luxury Image; With Instagram’s Reel, Facebook is Stepping Up the Offensive Against TikTok; Nike Pulls its Products from Amazon; Govt. Releases New Draft Consumer Protection Rules for E-Commerce; Disney+ Launches with Massive First-Day Subscriptions; Netflix Inks Multi-Year Deal with Nickelodeon and more.
Alibaba Smashes Records with $38 Billion Singles’ Day Sales
Shrugging concerns of “weakening discretionary spending” and “more muted” demand from Chinese customers in the face of a domestic slowdown, Alibaba’s annual 24-hour shopping event raked in sales worth a whopping $38 billion. Singles’ Day, the biggest shopping festival in the world, has been held annually on November 11 for the last ten years, and regularly generates greater sales numbers than popular US shopping holidays Black Friday, Cyber Monday, and Thanksgiving Day combined. This year, Chinese consumers splurged on discounted products ranging from cars, travel packages, and Apple electronics to food supplements, facial masks, and baby milk powder, as the gross merchandising value (GMV) of sales crossed $1 billion in about one minute, and $10 billion in under thirty minutes, eventually ending at a record $38.38 billion (268.4 billion yuan), marking a 26% growth over last year’s GMV of $30.5 billion.
The lead up to the day saw increased debates on the effects that the US-China trade war and potential consequent Chinese nationalism would have on the performance of American brands in the sale, with concerns that Chinese consumers would give them the “cold shoulder”. However, these concerns seem to have been unfounded as the sale, kicked off by a live performance by US pop star Taylor Swift, saw the US being the second highest country by GMV of sales. While Single’s Day is often considered as a barometer for Chinese consumer spending, this year’s sale was considered to be of especial significance as it was “being held up as a bellwether of Chinese consumers’ willingness to spend” in the face of a Chinese economic slowdown and the global trade war, according to Jeffrey Halley, senior market analyst for Asia Pacific at Oanda. However, analysts have warned that GMV figures are essentially meaningless, and have pointed out the disconnect between GMV and revenue or profit figures, and the widening gap between them, as evidence of the same.
Ferrari To Limit Licensing in Bid to Bolster Luxury Image
Ferrari, the famed Italian car manufacturer, is seeking to revitalise its “luxury” tag with its non-car offerings. Despite earning over a quarter of its annual revenue from products other than its luxury sports cars, earned primarily through third-party licensing deals, Ferrari CEO Louis Camilleri said that the company planned to significantly revamp its licensing strategy as “some of the products [that Ferrari currently offers] do not fit our brand image and our luxury positioning” and these offerings threatened to dilute Ferrari’s “precious” brand equity. The Ferrari name and logo are currently licensed to several companies that stamp the same on consumer goods like leather loafers and sunglasses. The company plans to cut its current licensing agreements by about 50 percent, eliminate about 30 percent of its current product categories, and move toward partnerships that better reflect its luxury brand name such as one with Armani, the Italian fashion house, which is expected to help push the supercar maker’s handbag and clothing lines into the premium-price space. Moreover, Ferrari will also increase its focus on in-house manufacturing, with plans to roll out luxury-level apparel and accessories collections. This new direction undertaken by Ferrari is symptomatic of a trend amongst luxury brands aiming to exercise greater control over their brand name and image, by relying on licensing deals for a highly limited number of products and services.
With Instagram’s Reel, Facebook is Stepping Up the Offensive Against TikTok
After launching Lasso, a standalone app to rival TikTok, the Chinese social media video app that has become a worldwide sensation, last year, Facebook is now bringing TikTok-like features to Instagram. Instagram Reels will let users create 15-second videos set to music in the background (which they can select from other videos or from Facebook’s enormous music collection) and share them as Stories or send them privately to friends. Reels shared publicly will have the potential to go viral—much like TikTok—on the app’s Explore section.
For now, Reels is available only in Brazil, where TikTok hasn’t gained much traction. This internationalisation strategy worked surprisingly well when Instagram launched its Stories feature, an exact copy of Snapchat (another social video sharing app), in countries where Snapchat hadn’t expanded then, before rolling out elsewhere; so well, in fact, that it brought Snapchat’s growth to a screeching halt for three straight years. However, Instagram will soon be looking to gain a boost from its already existing user base of over one billion users.
However, Instagram’s main challenge will be retraining its user base to match the attitude commonly associated with TikTok. While TikTok videos majorly feature users acting ostentatiously showy or goofy to garner laughs, Instagram users are more used to trying to project a carefully curated image of glamour and glory. Moreover, creating premeditated and scripted content (which TikTok thrives on) is new for most Instagram users, who primarily share spontaneous, autobiographical content. Reel’s greatest test will be whether it can change Instagram’s culture to one where its users are comfortable and willing to look stupid.
Nike Pulls its Products from Amazon
Nike, the American athletic retail giant, has announced the end of a two-year pilot program with Amazon, and will stop selling its products directly via the e-commerce site. Nike announced that it will double down on its focus on “elevating consumer experiences through more direct, personal relationships”, amid an overhaul of its retail strategy and its hiring of John Donahoe, ex-CEO of eBay, the American e-commerce company. Amazon reportedly has been preparing for Nike’s departure and is aiming to ensure the continued presence of Nike products on its site by recruiting third-party sellers.
Govt. Releases New Draft Consumer Protection Rules for E-Commerce
The Draft Consumer Protection (E-Commerce) Rules, 2019, were released by the Department of Consumer Affairs, under the Ministry of Consumer Affairs, Food and Public Distribution, on November 11, 2019, for consultation. The Rules are identical to the E-Commerce Guidelines for Consumer Protection 2019, released by the Department on August 2. However, while the Guidelines were released under the Consumer Protection Act, 1986, the new Rules have been released under the Consumer Protection Act, 2019.
The Rules lay down liabilities for e-commerce entities as well as sellers and provide a consumer grievance redressal process. The Rules prohibit e-commerce entities from influencing prices of goods and services, adopting unfair or deceptive trade practices, leaving fake reviews as consumers, and misrepresenting or exaggerating the quality or the features of goods and services. The Rules place obligations on such entities to ensure that advertisements for marketing of goods and services are true and accurate, and state that entities shall be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its marketplace.
The Rules are open for consultation from stakeholders till December 2, 2019.
Disney+ Launches with Massive First-Day Subscriptions
The latest entrant into the increasingly overcrowded streaming service market, Disney+ has amassed over 10 million subscribers on its very first day, potentially outpacing analyst projections of 10-18 million subscribers in its first year. The live-action show The Mandalorian, easily the most popular attraction on the streaming service right now, riding on the massive fanbase of Star Wars, the epic space-opera media franchise whose universe the show is set in, was viewed over 2 million times on the first day. While these numbers might tempt comparisons to existing services like Netflix, analysts caution that it is too soon for such comparisons to be of any significance. Disney+ is currently available only in the United States, Canada, and the Netherlands.
Disney+ is expected to launch in India and other Southeast Asian markets late next year. In India, Disney+’s catalogue will be brought to Hotstar, an already-established streaming service in India that is owned by Disney. Hotstar’s primary draw is its streaming of the Indian Premier League, a domestic cricket tournament, whose latest iteration saw Hotstar’s monthly subscribers rise to 300 million. Hotstar’s user base, however, plummets below 60 million following the tournament, and it is at that time next year, that Disney plans to launch its Disney+ catalogue, in a bid to arrest that drop. The launch of Disney+, however, is expected to nearly double Hotstar subscription fees. Disney also plans to expand Hotstar to Indonesia and Malaysia among other Southeast Asian nations.
Disney+ boasts content from Disney, 20th Century Fox, Lucasfilm/Star Wars, Marvel, National Geographic, and Pixar, along with new shows slated for release. It is expected that Disney+ will have approximately 7,000 television episodes and 500 films. Interestingly, some of Disney’s classic animated movies carry content warnings notifying users of “outdated cultural depictions”. Some of these movies, many of which were released in the early- and mid-twentieth century, contain scenes that would widely be deemed racist, offensive, or inaccurate today. Movies like Dumbo, Lady and the Tramp, and The Aristocats, carry the warning that reads, “This program is presented as originally created. It may contain outdated cultural depictions.”
Netflix Inks Multi-Year Deal with Nickelodeon
Amidst increasing pressure from new rival streaming services, Netflix announced a multi-year licensing deal with Nickelodeon, the American television network aimed primarily at children and adolescents. While the companies’ existing partnership has resulted in the production of animated TV specials as Rocko’s Modern Life: Static Cling and Invader Zim: Enter the Florpus, with two more specials Loud House and Rise of the Teenage Mutant Ninja Turtles forthcoming, the two companies aim to produce original animated feature films and television series, based on both, existing Nickelodeon characters, as well as new ones.
One of these is reportedly a “music-based” spin-off of one of Nickelodeon’s most popular television shows, Spongebob Squarepants. The deal, which is estimated to be worth around $200 million, seems to be Netflix’s move to gear up against the arrival of the family-friendly Disney+ streaming service, which is already boasting of 10 million subscribers after merely 24 hours.
Authored and compiled by Neharika Vhatkar (Associate, BananaIP Counsels) and Param Gupta (Legal Intern)
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