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Pepsi Is Now a D2C Brand.. But Why Did It Embrace D2C

As online shopping goes through forced-adoption and becomes the new normal, Pepsi has embraced the direct-to-consumer trend and launched PantryShop & Snacks.com (will not open from Pakistan’s IP).

Some say that it’s more cost effective to be D2c by eliminating all middlemen. Which I think could be true in some cases if your brand has strong affinity but not necessarily true if you don’t have enough repeat purchases and always acquiring customers through advertising on Facebook, Google etc (the new middleman).

It makes sense for smaller, newer brands to embrace D2C as that probably is the most cost-effective way for them to launch the brand. But Pepsi has the supply network streamlined better than most companies in the world and probably not going D2C for cost-reduction. So why did Pepsi embrace the D2C?

I think, they are going D2C for other benefits of the model. Such as building relationships and acquiring data.

When you’re winning over your competition at a retail store, you may be winning the sale, but are you winning over your customers? Do you have control over your customers’ experience?

Do you have your customers’ data? Do you have their address, phone number, or other demographic data?

Do you really know your customer, or are you making (educated) assumptions about them?

How do you test or launch new products?

These are the reasons why I think Pepsi is embracing D2C.

We Are The Cockroaches

I’ve spent a significant part of my life running content sites that capitalized on catchy (click-bait) titles like the one above so I’ve old habits of using them time and again. The reason, however, why I chose this title for this blog is because there’s a myth that cockroaches can survive the nuclear apocalypse.

After reading about the studies that were conducted, I found out that while cockroaches can’t survive the apocalypse, just as no other biological creature can, they are 10 times more resilient against the radiations in comparison to humans. They also breed fast, so it’s a lot more likely for their generations to live despite the nukes.

I think thats us. The entrepreneurs of Pakistan. Or people of Pakistan in general. Allow me to explain please.

I’ve ranted enough times here on this blog about the lack of basic digital infra access. We don’t have PayPal for collecting small/medium international payments. We don’t have Stripe or other payment gateways, so we can’t collect payments from the credit & debit cards of the customers. We can’t sell on Amazon as a seller either. We’re not eligible for Facebook monetization programs such as Ad-Breaks / In-stream ads etc.

I can’t think of many businesses that can exist without the ability to accept payments. So, in summary, we’re in a pretty fucked up situation.

In comparison, PayPal is available in 200 countries. Stripe is available in 40 countries. Residents from over 100 countries can sell on Amazon US. Facebook monetization tools are available in over 50 countries. All the services described above are available in India & Bangladesh.

Despite that, one of the top ten largest sellers on Amazon US that is doing over $50 million dollars in monthly revenue is a Pakistan-origin company. There are thousands of sellers from Pakistan who sell on Amazon US by setting foreign companies.

The top 5 Facebook ad-breaks / in-stream publishers are Pakistan-origin companies doing millions of dollars in monthly revenue.

Pakistan also has the 4th highest number of freelancers in the world.

These people were banned from participating in this global trade. They were not given an equal playing field. They were born in poverty. There was a systemic racism in place.

While the west focused on “solving problems for others” that could make them billionaires, these people focused on solving their own problems. Problems originating from hunger. Problems originating from lack of education. Problems as basic as access to electricity. Even the middle class & upper middle class struggled with problems as little as the inability to afford air conditioning in scorching heat.

Because they were so tied up with solving problems so basic, I couldn’t and wouldn’t expect them to come up with the Googles and the Amazons of the world. I wouldn’t have even expected them to be top sellers on the marketplaces where they weren’t even welcome. But they are. Because they are resilient. If they have come this far, they will go farther too.

And so, I don’t have any doubts any longer, that Pakistani entrepreneurs will win, whether they get an equal playing field or not.

Systemic Racism & Entrepreneurs of Pakistan

In the past few weeks, I came across many videos that highlighted the systemic or institutional racism in the US. They highlighted how the opportunities are blocked for the people of color right from the start which result in the eventual 700% difference in the wealth between whites and people of color especially black.

systemic racism starts right from when you can’t go to the same schools as your white counterparts.

Here are some of the videos that I saw: 1 | 2 | 3

If you can see such contrast in citizens of the same country, how do you expect the same opportunities to be ever available to people of Pakistan? I received the following comment on a thread in one of the Facebook ads group, and it made me think about it (again).

If people of color struggle in the US, as a Pakistani entrepreneur, with limited access to quality education, lack of access to community, nearly no access to funding, not even access to the same softwares, or banking, how do you ever expect to achieve the same things that are achieved by the people of similar intellect in the US? The short is answer is that you can’t.

However, despite making the above statement, I’m extremely optimistic about the people of Pakistan and their future. The reason for that is that I’ve seen them rise up and stay resilient. Sure, they aren’t building any Amazon or Google, but they are doing much better than anyone could have expected given all the odds against them.

I want to write about this resilience in tomorrow’s blog.

Why Is Grayscale Buying 100% Of The Mined Bitcoins Since Halving

Grayscale is buying 100% of the bitcoins (and more) that have been mined since halving.

Grayscale’s fund is for the investors who want to buy and hold Bitcoins without going through the trouble and technicalities of acquiring and storing Bitcoins safely. Instead the investors simply buy shares in the Grayscale Bitcoin Trust.

But it’s not so difficult to buy and store Bitcoins especially with companies like Coinbase in business that make buying BTCs as simple as using PayPal. Then what is this new kind of increased interest from this certain class of investors who are only willing to buy Bitcoins through Grayscale’s trust? Let me explain.

This new attention seems to be coming from IRA / Roth IRA retirement and pension accounts that are eligible for tax benefits when buying BTC through Grayscale’s trust. In other words, with macro instability and to hedge the COVID-19 related crisis, the retirement and pension money is going into crypto-assets.

There are many out there who view Bitcoin as fake-money or a ponzi-scheme. At the same time the world is exchanging “real cash” for the “fake one” at 30 million dollars per week from their retirement and pension accounts to weather a storm.

Last Mover Advantage

The first mover advantage is talked about a lot. The first mover advantage is often quite great but not necessarily game-changer. First mover advantage is both for businesses and early users of the businesses. For example, Amazon has the first mover advantage in the e-commerce space. The early sellers of Amazon also enjoyed first-mover advantage on the platform by monopolizing competitive niches. All early users of social networks that eventually go big have a huge first-mover advantage in influencer marketing.

But the last mover advantage is not frequently talked about. The last mover advantage is that you look at everyone’s mistakes, let them take risks, and you only launch a product after learning at their expense. This isn’t talked about a lot probably because it’s not fancy to talk about it and that not everyone can enjoy the last mover advantage. Often but not always, you need to be at a place of influence to enjoy the last mover advantage.

On Amazon, as a seller, you often prefer going after products that others have tried and tested for months, you learn from their experience by studying the listings, and launch in the end so you have absolutely no risk of dead or wasted inventory etc.

In a similar manner, as a seller, Amazon enjoys the true last mover advantage. After all sellers are done testing, trying, risking, & iterating, Amazon comes right in the end with their own private label product often under the brand name of Amazon Basics. Because they enjoy a position of having everyone’s data, they truly love having the last mover advantage.

The Chinese Live Streaming E-Commerce Craze

Tech adoption and associated consumer trends in China are a few years ahead of the west. One such trend took a massive boost through the COVID-19 crisis in China and has become a major craze.

It is the live-stream e-commerce which Chinese believe is the closest experience to shopping offline in a retail store.

Many Chinese e-commerce apps, live-streaming apps and super-apps have embraced this trend including TaoBao, WeChat and Douyin (TikTok China) and the shopping experience really is friction-less.

Here are some of the reasons why I think this trend will grow, not just in China, but in the west too.

Firstly, live-stream e-comm is great for product discovery. Amazon in its current form is great for search and buy shopping experience but awful for discovering new products. On the other hand, Instagram is a good platform for discovering new products, but doesn’t have a seamless shopping experience in its present form. Although, with the announcement of “shops”, there’s an obvious plan to change that.

Secondly, all the Chinese apps are offering in-app checkout. So you can tap on the products shown in the live-stream and conduct your purchase right within the app while the live-stream stays uninterrupted. Instagram plans to bring in-app checkout with “shops”.

Thirdly, the Chinese apps have in-app frictionless payment options e.g AliPay and WeChat Pay. Facebook/Instagram do not yet posses the capability to offer in-app payments, but plan to offer with Libra.

Fourthly, in-app streaming & shopping experience enhances consumer trust as the products are shown live instead of the photoshopped 3D photos and professional videos.

Fifthly, apps also offer AR try-ons. So you can try the products e.g glasses, shirts etc to get a feel of how they would look on you.

And lastly, the apps have built-in game mechanics with features to induce scarcity, and get credits/cashback for sharing the stream with your friends etc.

It is unbelievable how far in the future China is with e-commerce in comparison with the western counterparts. But I’m sure that the west will catch up to these trends.

Instagram and TikTok are best positioned in the west to capture this in the future. If you’re an influencer on one of these platforms, the great days will come as the west catches up with the Chinese frenzy.

Riding Along The Wave

Forbes is double-dipping in ad-revenue by publishing about Kylie Jenner. First they made the entire world read the headlines that Kylie is the world’s youngest self-made billionaire.

Months later they published that Kylie and her family lied about her billionaire status and that she is not yet a billionaire. Instead, she’s worth only 900 million.

I don’t know about you, but I see no difference in being a billionaire or being worth 900 million. If she’s worth 900 million, she will be a billionaire in 1 or 2 years.

Instead I thought of something else when I read the news. I thought that an instagram influencer is (nearly) worth a billion dollars. She’s built this empire using Instagram, a Shopify store, and by private labeling products.

I also thought that Facebook only paid a billion dollars for Instagram while today an Instagram influencer is worth a billion dollars.

I also thought about TikTok posting 17 billion dollars in revenue in 2019 and over 3 billion dollars in profits. And the fact that they have over 1.5 billion monthly active users, more than Instagram as well as Snapchat.

I thought about gaming influencers/streamers who are making tens of millions of dollars per month using Twitch, YouTube, etc.

I thought about influencer marketing. I thought about riding along the wave of a powerful platform such as TikTok.

And I thought how being early in riding that wave can make you a millionaire or even a billionaire.

I have known, met or spoken to 100s of influencers till date who were early in riding the wave on Digg, StumbleUpon, Reddit, Facebook, Instagram, Snap, TikTok etc. I know a large majority of them are worth at least hundreds of thousands of dollars.

If you saw a platform taking off, figured it early, and cringed instead of taking advantage, it was your loss and it will continue to be.

Libra Vs Bitcoin

The optimist in me loves Bitcoin despite its many shortcomings. I don’t think Bitcoin will ever be as popularly used as Libra or another stablecoin payment system. Despite that, the optimist in me suggests Bitcoin is a great buy.

The realist in me recognizes how powerful Libra could be. For those of you who don’t know what Libra is, it’s a collateralized crypto-payment project by Facebook. Libra plans to offer basket of stablecoins like USD, EUR & GBP.

Here’s an intro video of the Libra Project.

There are many collateralized stablecoins already out there in the market so Libra isn’t planning to do something that isn’t done before. However the unique thing about Facebook is that whatever they do, they can plug and play that to 2.5 billion users.

Libra’s Advantages

Facebook demos that they will make sending money as simple as sending emojis with features to do so built right within the Facebook’s family of apps. Libra’s unique proposition in comparison to other available options is users and ease of use.

Libra or other stablecoins have several advantages over Bitcoin. The crypto-assets will be fully collateralized and backed by fiat currencies. The crypto-assets will be stable in value and the transactions would be really fast.

.. But Money Is Already Digital?

However, if you think about it, money is already digital. When you pay with your debit and credit cards, or you send money using your bank, or through PayPal, you’re passing value digitally. Money has been digital long before Bitcoin or any crypto-assets.

Digital is generally the opposite of anonymous and censorship-resistant. When you say digital, the information about your money is hosted on someone’s server. Who ever controls the server can see what you do with your money and can intervene, reverse or block actions that you may take with your money.

Cash in comparison is not digital but anonymous and censorship-resistant.

Bitcoin’s Advantages

Bitcoin’s # 1 strength is seldom talked about. It is the finite supply of Bitcoin which makes it deflationary in nature instead of inflationary which USD and all its digital variants including stablecoins & Libra are. The second most important feature is that Bitcoin is censorship-resistant because it is decentralized with no central control. The third one about anonymity could be argued upon. It does an OK job at being anonymous but since the ledger is out in the public, it isn’t fully anonymous.

Conclusion

The feature of stablecoins being stable like USD or EUR is not just a feature, it’s also a bug. One of the biggest disadvantages of money as we know it is that you can’t just hold on to money without losing value. You’re forced to have your money invested in real-estate, stocks & bonds for it to not lose value. Bitcoin as a money is designed to be free forever from the central bank’s control over the money’s supply and its movement. Because of this Bitcoin is designed to grow in value and hence it can not be stable.

The following table could be helpful

AssetDigitalDeflationaryCensorship-resistantStableAnonymous
BitcoinYesYesYesNoYes
CashNoNoYesYesYes
Stablecoins / LibraYesNoNoYesNo

Why You Should Start A Business In Recession

One of the advices that seems to come from everywhere with regards to recession is to lower your customer acquisition cost because the lifetime value of the customer is going to be lower than before. Of course this makes sense. There will be behavioral changes in the purchasing patterns as well as cut in spending. This will make your customers less valuable for you than before.

However, when the customers are spending less, and the businesses are paying less to acquire them, it makes customer acquisition cheaper for all businesses. Sure, they are cheaper to acquire because they are less valuable, but you are being given a one off opportunity when it’s over-all cheaper to start your business.

The cost to start a new business is significantly lower during a recession.

If you’re not VC funded but bootstrapped like me, this means a great deal. We’re already planning some e-commerce stores and hoping to schedule the launch right when the markets are in deep turmoil.

What’s Way More Dangerous Than Most People Think?

I found this interesting reddit post about what’s way more dangerous than most people think?

One of the responses personally got me

Doing nothing for a long period of time.

As I’ve mentioned on this blog earlier, I retired for a bit over 2 years. But the idea of retirement shouldn’t be to prepare yourself to do nothing. Because do nothing gets you, gets you fast, and gets you bad.

Instead, the idea of early retirement should revolve around doing the meaningful. It should revolve around working on things you’re passionate about and working for that passion and not for the associated compensation.

I’ve heard other early retirees say the same.