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Michael Dempsey
China's largest social media influencer manager, Ruhnn, filed their S1 to go public today. Let's take a journey through this to learn more about what "Key Opinion Leader facilitators" (their term, not mine) is like.
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Michael Dempsey Mar 6
Replying to @mhdempsey
First, what do they do? Simply, they enable influencers to market and sell goods They do this through: 1) A full-service model where they manage product design, sourcing, sale, & analytics for their own brands. 2) A platform model connecting third-party brands to influencers.
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Michael Dempsey Mar 6
Replying to @mhdempsey
How do they do it? They are basically an incubator for influencers. They scout for top tier and emerging influencers, train them, grow their following, then monetize them, mostly through sales of products.
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Michael Dempsey Mar 6
Replying to @mhdempsey
Their core IP is debatable, but they view it as: - The incubation system/workflow - Ability to continually diversify monetization channels - Supply chain management - Data analytics to analyze purchasing trends, customer desires, & feedback. - A brand around influencer growth.
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Michael Dempsey Mar 6
Replying to @mhdempsey
How's the business? Small but growing. - $328M of GMV - $137M in revenue in FY2018 - 148.4M fans (78% female) across 113 influencers
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Michael Dempsey Mar 6
Replying to @mhdempsey
Ruhnn has "tiers" of influencers. There is serious concentration risk as their "top tier" influencers account for 55% of company GMV. ZHANG Dayi is one with 10M+ fans across multiple platforms and a taobao store that consistently ranks in the top 15 on Singles Day for GMV.
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Michael Dempsey Mar 6
Replying to @mhdempsey
But Ruhnn consistently mentions what they believe to be the impending "decentralization of KOLs" or a long tail developing. Specifically as influencer competition grows, they expect to continually target more niche influencers to diversify their audiences and monetization.
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Michael Dempsey Mar 6
Replying to @mhdempsey
Good news for them, the market is growing. - Chinese market for the influencer economy is $13.7B in 2017, expected to reach $78.2B in 2022 - Chinese market for influencer facilitators is $5.8B in 2017. $30B in 2022.
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Michael Dempsey Mar 6
Replying to @mhdempsey
Ruhnn believes the future of influencers will be more collaboration with existing brands, more verticalization of influencer brands, and the previously mentioned long tail of the influencer economy becoming more important.
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Michael Dempsey Mar 6
Replying to @mhdempsey
*Random facts* Tech: - DeepFashion, analyzes posts & historical sales for apparel to recommend and create fashion trends - Smart Content, Basically AI to create content marketing templates for these posts - Smart Fabric Detection - Using CV to identify defects on fabric rolls
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Michael Dempsey Mar 6
Replying to @mhdempsey
Last random fact: Despite the influencer trend, no manager/executive at the company is below the age of 37 (or above the age of 50). This is interesting considering I'd imagine the average age of their fans and influencers are significantly lower than this.
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Michael Dempsey Mar 6
Replying to @mhdempsey
Overall - It's interesting to look at a company like this through public market lens (sans a financials deep dive) - The supply chain feels like differentiation to me, but very possibly not in China. - Not fully owning the IP is a problem. - Technology feels weak at best.
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Andrew Mendez Mar 6
Replying to @mhdempsey
This is insightful, thanks!
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Charlie Petty Mar 6
Replying to @mhdempsey
As someone who has never thought about influencers, this is crazy/amazing!
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Turner Novak Mar 6
Replying to @mhdempsey
I only skimmed this, but surprising to see product sales dropped so much in Oct-Dec '18. Looks like up to ~54% of employees (overhead) are directly working on product, and advertising (Services) seems to be growing faster with higher margins anyways.
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Leon Lin Mar 6
Replying to @mhdempsey
This is great, thanks. How do they compare to their main comps?
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Michael Dempsey Mar 6
Replying to @TurnerNovak
It's clear they favor the "asset light" model (services) for long-tail. I'm just not sure that is mid-term defensible nor as high upside. I wonder if they will use services model for "emerging" influencers to then push them to "top tier/established" and go fully in-house.
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Craig Hunter Mar 6
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Phil Jacobson Mar 6
Nice. Thx!
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Dave Ambrose Mar 6
Replying to @Leonlinsx @mhdempsey
I knew Leon would dig this 😉
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