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| Here’s your daily business briefing. - 💪 Strong consumer sales in December 2023
- 📉 Deep Dive: Americans drop more streaming subscriptions
- 🚗 Bring a Trailer: $1.4B record sales
Thanks for reading! Shriram
p/Shriram | |
| 1 | | The Commerce Department reported that U.S. retail sales rose 0.6% in December from the previous month, surpassing expectations and indicating a robust holiday season for retailers. On a YoY basis, sales increased by 5.6%, slightly below December 2022 but still outpacing inflation. More: - The positive numbers were attributed to consumer spending on apparel, cars, department stores, and online shopping.
- In December, spending at restaurants and bars stayed the same while some categories — like electronics and furniture — decreased.
- Defying predictions of a recession, 2023's robust consumer spending was fueled by dining and tourism.
- It is projected that consumer spending will continue to be a significant engine of growth even with the anticipated downturn in economic growth in 2024.
Zoom Out: - According to Adobe Analytics, American online purchases during November and December totaled $222.1B, a 4.9% increase over the same period last year.
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What the numbers say: Customer defections across premium streaming services rose to 6.3% in November from 5.1% a year earlier. About 25% of U.S. primary streaming service subscribers, including Disney+ and Paramount+, canceled three or more due to rising prices. Ad-supported plans are rising, with nearly 60% of new Disney+ subscribers and over one-third of new U.S. Netflix customers choosing ad-supported tiers in November, compared to 11% a year earlier, generating revenue from subscriptions and ads. Relevance: Streaming users strategically manage subscriptions based on content and pricing, driven by rising costs and a desire for savings. Streamers employ tactics like ad-supported tiers, bundled deals, and discounts to retain customers and improve profitability, emphasizing the need for long-term customer relationship management. More data: Streamers may need to tailor ads and marketing to specific times of the year to win back customers, as evident in individual choices like opting for ad-supported tiers, downgrading plans, or canceling subscriptions based on content availability and pricing. | | | |
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| 3 | | In 2023, Bring a Trailer, the online auction platform for collectible cars, set a record with sales surpassing $1.4B, marking a 2% increase from the prior year. Despite a dip in classic car prices, the platform experienced a 19% rise in sales, reaching over 30,000 cars, while the average car price decreased to $54,000 from $59,500 in 2022. More: - In 2023, the market for vintage cars suffered a decrease in price because of reasons like inflation, rising interest rates, and economic instability.
- After accounting for live and online auctions, total sales of classic cars fell by 3% to $4.19B in 2023 from $4.32B in 2022.
- The overall market trend was opposed by Bring a Trailer's surge in registrations and sales of cars, which reached 1.2 million in 2023.
- To improve the user experience and expedite the checkout process, Bring a Trailer intends to introduce new services in 2024.
- The platform's success was primarily attributed to its user-friendly and cost-effective model, which had a $99 flat selling fee and a 5% buyer fee capped at $5,000.
Zoom out: - Two cars surpassed a sale price of $2M in 2023 on the site: a 2014 Pagani Huayra for $2.9M and a 1967 Porsche 910 race car for $2.5M.
- The cheapest vehicle sold in 2023 was a 1979 Honda PA50-I Hobbit moped for $800.
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| 4 | | In 2023, space sector investment rebounded to $12.5B, surpassing the previous year but not reaching the 2021 record of $15.3B. Notably, space infrastructure companies, demonstrating resilience, accounted for $2.6B in the fourth quarter, constituting 70% of the total 2023 investment. More: - In 2023, marked as a year of consolidation, the space sector witnessed 39 merger and acquisition deals, such as Viasat ($VSAT) acquiring Inmarsat and L3Harris ($LHX) purchasing Aerojet Rocketdyne.
- Several notable startups, including Firefly Aerospace, Ursa Major, D-Orbit, Stoke Space, and True Anomaly, reported capital raises during the fourth quarter.
- The report expects further consolidation in 2024, driven by potential interest rate declines, boosting equity valuations, and fostering more mergers and acquisitions.
- Venture capitalists' increased selectivity in deploying reserves may lead to failures and acquisitions despite a rebound in space capital markets.
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| 5 | | Danish shipping giant A.P. Moeller-Maersk (MAERSK-B.CO) and Germany's Hapag-Lloyd (HPGLY) are establishing the Gemini Cooperation, a vessel-sharing agreement utilizing around 290 ships with a total container capacity of 3.4 million. With Maersk deploying 60% and Hapag-Lloyd 40% of the vessels, the alliance aims to enhance efficiency, accelerate decarbonization efforts, and address the industry's surplus of ships, ultimately seeking to lower freight rates. More: - Following recent hostilities, Maersk has suspended shipping in the Red Sea and the Gulf of Aden, affecting maritime routes.
- As a result of this arrangement, Hapag-Lloyd will depart the alliance at the end of January 2025.
- The companies aim for schedule reliability exceeding 90% once the network is fully implemented.
- The decision arises in response to challenges in the shipping sector, such as excess capacity, diminishing freight rates, and disruptions caused by geopolitical events.
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| 6 | | According to a report by Meta and Bain & Company on Southeast Asia's digital consumer behavior, 72% of Singapore's Gen Z population favors online shopping. Gen Zers take the lead in online discovery, evaluation, and purchases, with 45% utilizing social media platforms like TikTok and Instagram, which integrate e-commerce features, driving the growth of social commerce. More: - According to a Research and Markets analysis, the social commerce market in Singapore is expected to grow to $6.99B by 2028.
- For Gen Zers, social media commerce offers a one-stop shop that combines direct buy capabilities with information search facilities.
- Over 15 million businesses use TikTok for promotion, and per a 2023 survey by British analytics firm YouGov, Gen Zers prefer to shop on Instagram and TikTok over Facebook.
- On TikTok, "shoppertainment," videos combining information and amusement for online purchases, has grown into a $500B industry.
- Gen Zers rely on live-streaming features and nano-influencers to make purchasing decisions, and they respect the authenticity and credibility of content makers.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
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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 Aaron Crutchfield | |
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