| Here’s your daily business briefing. - ✈️ United Airlines' personalized seat-back ads
- 🔍 Deep Dive: U.S. prescription drug prices are sky-high
- 🛒 EBay: 90% bought or sold used items last year
Thanks for reading! Shriram
p/Shriram | |
| 1 | | United Airlines launched Kinective Media to serve personalized ads on seat-back screens and its app, partnering with brands like Norwegian Cruise Line and Macy's. This initiative leverages customer data for targeted advertising, aiming to boost revenue and enhance loyalty programs. More: - United is retrofitting its narrow-body planes with seat-back screens, but it is experiencing delays due to supply chain issues.
- The platform enables brands to engage with customers across the entire marketing funnel, from brand awareness to conversion.
- Delta Air Lines capitalized on its loyalty program by providing complimentary Wi-Fi to SkyMiles members beginning in early 2023.
- United anticipates an average traveler flight duration of 3.5 hours, offering substantial advertising exposure time.
- Advertisers cannot access personally sensitive information, and customers can choose not to receive customized ads.
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What the numbers say: Americans spent nearly three times more on prescription drugs in 2022 than those in 33 other high-income countries, with an annual cost of $1,400 per person and total spending of $634B. In the U.S., patients directly cover 14% of the cost of prescription drugs out of pocket. One in five U.S. adults couldn't complete a prescribed medication course due to cost, and while Novo Nordisk's Ozempic costs less than $5 to produce, it sells for nearly $1,000 in the U.S. Relevance: High prescription drug costs in the U.S. affect patient adherence and increase healthcare costs through insurance premiums and taxes. Unlike other countries, the U.S. lacks direct government intervention in drug pricing, but the Inflation Reduction Act aims to change this by allowing Medicare to negotiate prices, potentially saving nearly $100B by 2031. More data: European countries typically have 85% to 90% lower drug prices than the U.S. The new U.S. law will begin Medicare price negotiations for ten drugs in 2026, expanding yearly, while pharmaceutical companies argue this could harm innovation. | | | |
| 3 | | According to eBay's 2024 Recommerce Report, more than 70% of consumers worldwide intend to purchase secondhand items in 2024, while 86% have bought or sold pre-owned goods in the past year. Notably, eBay experienced a remarkable surge in apparel and accessories sales labeled as "thrifted," with a global growth rate exceeding 400% between March 2023 and March 2024. More: - Millennials and Gen Z, constituting 66% and 62%, respectively, consider purchasing pre-loved items personally significant, contributing to the growth of recommerce.
- According to the eBay report, 53% of customers perceive fast fashion as environmentally damaging and linked to unfair labor practices.
- eBay's gross merchandise volume consists of 40% pre-owned and refurbished items, with 77% of customers considering pre-owned purchases a recent trend.
- ThredUp's annual resale report aligns with the trend, indicating that 52% of respondents purchased secondhand apparel in 2023, with 65% of Gen Z and millennials engaging in preloved shopping.
- Over half of ThredUp customers plan to continue purchasing used clothing if the economy remains stagnant, while 50% of Gen Z eBay buyers save money to indulge.
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| 4 | | Cognizant Technologies is acquiring Belcan, a digital engineering firm, for about $1.3B in cash and stock, aiming to expand its presence in the aerospace, defense, space, and automotive sectors. Belcan, based in Cincinnati and owned by private equity firm AE Industrial Partners, has a global workforce of 10,000 across 60 locations, serving clients like Boeing, General Motors, Rolls-Royce, NASA, and the U.S. Navy. More: - Cognizant CEO Ravi Kumar emphasized Belcan's expansion in aerospace and defense, aligning well with Cognizant's IT services expertise.
- The acquisition facilitates the integration of Belcan's engineering expertise into Cognizant's core strengths in the industrial manufacturing and automotive sectors.
- Belcan will retain its current leadership under CEO Lance Kwasniewski and function as a subsidiary of Cognizant.
- Cognizant is valued at $33B and seeks to bolster its specialized services amidst anticipated client spending reductions.
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| 5 | | Klarna Bank AB has partnered with J Sainsbury Plc to offer BNPL options for online shoppers at Argos, Habitat, and Tu, excluding Sainsbury's grocery stores. Klarna has also expanded its BNPL services with U.K. brands like Deliveroo, Harrods, and Liberty. More: - Sainsbury's is closing standalone Argos stores to boost online sales and outsource Argos financial services.
- Klarna is rapidly expanding in the U.S. with partners like Walmart and is preparing for an IPO.
- Klarna has created a U.K.-based holding company to increase flexibility for its potential IPO.
- Although largely unregulated in the U.K., Klarna introduced late fees last year, which improved customer repayment rates.
- The second-biggest general merchandise store in the U.K., Sainsbury's, gains from Klarna's BNPL services as part of its strategic move to online sales.
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| 6 | | Noble Corp., the largest offshore oil-rig contractor globally, is set to acquire Diamond Offshore Drilling Inc. for $1.6B. Diamond shareholders will receive 0.2316 shares of Noble plus $5.65 per share, amounting to an 11.4% premium over the June 7 closing price, with Diamond shareholders expected to hold around 14.5% of Noble's outstanding shares post-acquisition. More: - Noble's strategy focuses on acquiring the largest offshore oil contractors globally, with the Diamond acquisition aligning perfectly with this objective.
- As the expansion of U.S. shale basins diminishes, offshore drilling is anticipated to see growth in the foreseeable future.
- The merged entity will boast the largest fleet of state-of-the-art drillships, featuring advanced safety technology tailored for deepwater drilling.
- Noble intends to finance the cash component of the acquisition with a $600M bridge loan and boost its quarterly dividend by 25% to $0.50 per share, effective in the third quarter.
- Morgan Stanley & Co. advised Noble, while Guggenheim Securities LLC and TPH&Co. assisted Diamond with legal counsel from respective law firms.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Shriram Jeevakumar | |
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