Thursday, November 26, 2015

Patti Lebelle's Pie Success

A paean to Patti Labelle's Swee'patata pie went up on Youtube 12 November, it has 3.5 million views by the day before Thanksgiving, 26 November, and it helped push sales of the $3.28 pie to one pie per second for 72 hours straight at Walmart.  

This will go down as exhibit A in the canon of viral marketing.  There are two sides to this, a reality side and a fantasy side.  Billions will now be spent attempting to replicate a fantasy, and ignoring the reality.  The fantasy is viral marketing can make you rich and is replicable.  The reality is no one will make any extra money off this, and it is not replicable.

First the video, but warning, naughty language.

First how many pies is one every second per day?  86,400.  At retail of $3.28.    That is about $284,000 at retail.  Do you know why Walmart had $284,000 worth of pies ready to sell?  Because Walmart expected to sell them.  If this viral video had an effect, then it only accomplished moving the pies faster than Walmart expected.

What we do not know, and Walmart is not likely to reveal, is what they expected to sell and on what time frame.  The video impacted sales and created more demand in a given time frame than Walmart anticipated. Walmart now has information upon which it can hypothesize near term sales, given the impact of the viral video.  This now breaks into two parts; replenishment (today it is in a sold out position at Walmart online) and purchase order.

Walmart will write one of their legendary 50 page purchase orders that will offer to buy X many pies at Y price, and all risk will be with Patti Labelle.  Walmart has raised the price 20 cents (slowing demand by raising price), but even at 21 ounces for $3.48, or just under 17 cents an ounce, this has to be one of the most inexpensive pies ever concocted.  With ingredients including "all California sweet potatoes" (Not 'Bama sweet potatoes?) coming up with that many sweet potatoes at that low of a price in the holiday time frame is one tall order.

Now no doubt that many pies has 50 separate industrial bakeries banging out her pies already, so it is a matter of booking more production time, but at overtime costs, since this is the busiest season for the industrial bakers.  With margins this tight, there is not a lot of room for either cost rises nor inventory mistakes.  I bet Walmart stays largely sold out, and they simply sell through what was ordered anyway. Nobody lifts a finger to expand production or sales.  There is nothing to be gained.

Patti Labelle is a smart, successful woman, and in one of the toughest industries out there, music.  She knows how contracts and managers make sure you earn practically nothing, so she is not about to be fooled by this fake success.

Nonetheless, this story will circulate for decades as people sell the fantasy of getting rich through viral marketing.  Even if you were a famous singer who went into pies and someone had a video that went viral (you aren't, and you won't) there is no money to be made following the "success" anyway.

Yet, people ever want to believe business success is about luck, fortuna, when it is about serving others.

As an aside, is her pie really that good? The pie has 90 reviews at Walmart online, where it is judged "not diabetic friendly" for being "super sweet."  Well, yes, in taste tests the most popular version of anything has the most sugar.  Imagine that.  You think you are eating all healthy like when you have a sushi meal?  Raw fish, organic rice?  Guess what holds that sushi rice together?  Sugar.  I was astonished at 15, taking a Japanese cooking class, to find every Japanese recipe loaded up on sugar.

But that is an aside.

What Ms. Labelle might do is instead of ramping up production, just license out her name to all of the pecan and pumkin pies coming out of industrial bakeries in plain boxes to be sold at grocery stores...  at 20 cents a pop, she could make millions at no risk to herself...  any mistakes by the licensee ends up in extra labels, not pies.  But she knows the music business, and that may be what she does.  Let's watch.

Feel free to forward this by email to three of your friends.


Anonymous said...

Well said. Personally, after watching the video I am less inclined to buy the PL pie.
Your following sentence said it all, "Yet, people ever want to believe business success is about luck, fortuna, when it is about serving others".
Creating something of value (a service or product) that serves others is a key to success.