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| Here's your daily business briefing. - 🏥 Lilly, Amazon partner for weight-loss drug sales
- 🔍 Deep Dive: Temu's spending strategy drives American success
- 🏛️ U.S. House passes TikTok divestment bill
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Eli Lilly & Co. ($LLY) is collaborating with Amazon Pharmacy to distribute certain prescription drugs, including the weight loss treatment Zepbound, through LillyDirect, its direct-to-consumer website. Amazon Pharmacy ($AMZN) becomes the second online pharmacy to partner with LillyDirect, offering two-day drug deliveries to patients with a Prime membership. More: - Eli Lilly's Frank Cunningham views Amazon Pharmacy's two-day delivery as a customer-focused advantage.
- Amazon Pharmacy offers round-the-clock access to clinical pharmacists for patients seeking medication guidance, which is particularly crucial for those using weight loss injections such as Zepbound.
- Amazon's collaboration with Eli Lilly expands its healthcare offerings, integrating initiatives like insulin coupons, in line with its strategy of healthcare expansion through acquisitions such as PillPack and One Medical.
- With the partnership, Lilly may reach a wider audience, as seen by the fact that Amazon Pharmacy's active client base has doubled.
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What the numbers say: Temu quickly became the second-most popular U.S. shopping app, overtaking Shein in just six months, driven by aggressive advertising. Despite a $7 per order loss in 2023, Temu's marketing spending surged to $1.7B, projected to reach nearly $3B in 2024, making it the fifth-largest digital advertiser in the U.S. by Q4 2023. Additionally, Temu saw a staggering 950% year-over-year increase in U.S. mobile app monthly active users during Q4 2023. Relevance: Temu's swift U.S. growth, driven by budget-friendly items and aggressive advertising, disrupts domestic retailers like Etsy and dollar stores by hiking ad expenses and diverting customers, mirroring its parent company PDD's tactics in China. This expansion, alongside rival Shein, transforms the e-commerce landscape, challenging established players like Amazon. More data: According to recent studies, Temu's marketing strategies draw customers away from rivals like Dollar General, altering spending trends. Analysts anticipate Temu's contribution to PDD's profits to rebound from a $3B loss in 2023 to a $3.5B gain by 2027, posing a potential challenge to Amazon's dominance in the U.S. e-commerce market. | | | |
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| 3 | | The U.S. House of Representatives passed a bill with a vote of 352-65 requiring ByteDance, TikTok's parent company, to divest its U.S. assets within six months or face a ban. While President Joe Biden expressed readiness to sign the bill, its fate in the Senate is uncertain as Majority Leader Chuck Schumer has not yet supported it, and some senators are exploring alternative regulatory approaches. More: - The CEO of TikTok, Shou Zi Chew, issued a warning, stating that the measure would affect billions of dollars and jeopardize 300,000 American jobs if TikTok was banned in the U.S.
- Prominent Democrats and Republicans supported the law, which had bipartisan support despite opposition from Chinese authorities.
- The law addresses worries about TikTok's Chinese ownership and the possible transfer of user data related to national security to China.
- App shops like Apple and Google would be legally prohibited from offering TikTok if ByteDance cannot sell its U.S. assets.
- TikTok and its supporters want to file a lawsuit against the bill, claiming First Amendment rights are violated.
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| 4 | | Family Dollar, a subsidiary of Dollar Tree ($DLTR), plans to shutter nearly 1,000 stores due to longstanding mismanagement, poor conditions, and a recent $40M penalty for a rat infestation. Economic challenges such as high inflation and cuts to government assistance programs like SNAP have also hurt the purchasing power of low-income customers, impacting Family Dollar's bottom line. More: - Dollar Tree will close 30 stores when their leases expire, while Family Dollar expects to close 600 outlets this year and 370 locations over the following few years.
- Following the announcement, Dollar Tree's stock fell more than 13%, reaching its lowest point of the year.
- The expansion of cheap retailers like Dollar General, which owns around 18,000 locations and opens roughly 1,000 each year, starkly contrasts Family Dollar's troubles.
- Low-income consumers are drawn to Dollar General because of its cheaper costs compared to Family Dollar, Walmart, Target, and other stores.
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| 5 | | Fisker ($FSR), an electric vehicle startup, has enlisted restructuring advisors amidst talks of bankruptcy due to its substantial debt exceeding $1B, despite reporting $273M in sales last year. The company's shares plummeted more than 46% in after-hours trading after news of hiring restructuring firms surfaced, signaling investor concerns about its financial stability. More: - Due to a lack of qualified accounting specialists, Fisker could not release its complete financial statements on time.
- The business' difficulties reflect more significant issues facing the EV sector, such as complicated production processes and the lackluster American market for electric cars.
- Since going public in 2020, Fisker's share price has crashed by over 97%, so shares are selling for less than $1, and the company could be delisted from the NYSE.
- The business contracted with Magna Steyr to produce the Ocean SUV; however, there were delivery issues while trying to get the vehicles to clients in the U.S.
- Fisker's Ocean SUV has faced quality problems, including braking performance issues under investigation by the National Highway Traffic Safety Administration.
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| 6 | | For those making a cheeseburger, the price of beef patties increased by about 5.9% YoY, while the cost of the special sauce rose by 3.1%, with lettuce and cheese prices decreasing by 6.1% and 2.8%, respectively. Additionally, pickles, onions, and sesame seed buns saw price hikes of 3.3%, 1.3%, and 1.7%, respectively, contributing to overall food inflation remaining flat in February compared to the previous month and reaching a nearly three-year low on a YoY basis. More: - Prices for frequently purchased commodities, such as bacon, eggs, and coffee, are rising more quickly than before the pandemic.
- Concern has been raised over the rising cost of burgers as certain places have seen McDonald's Big Mac combination meals approach $20.
- Owners of burger restaurants, such as Owl Bar & Cafe, have had to gradually raise prices to stay in business due to increased labor and ingredient costs.
- Limited supply resulting from drought and escalating costs drives beef prices, with forecasts suggesting possible record highs by the end of 2025.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
| Upcoming Events | | MAR
27 | | Join DTC industry leaders and CEOs at the pivotal virtual roundtable event 'Shaping the Future of DTC in 2024.' | | | | | | * This is a sponsored event | | | |
 | 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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