Riot, Peloton, Zoom, Costco, Amazon and Instacart Drive Strong Growth
Brand strategy is on the mind of executives as a top focus and priority in 2021. There’s good reason for executives to look for current brand strategy examples and to revisit their brand strategy.
Two recent studies by McKinsey and Ketchum show that some 45 to 75% of American consumers were shifting their brand loyalty and trying new shopping behaviors since COVID-19. So, while employee health, labor challenges, cost increases, supply chain, and other challenges present immediate burning platforms for action, the reality is that brand strategy also needs attention in 2021.
Considering these six brand strategy examples of billion dollar brands that grew in 2020 can provide inspiration for others to reexamine their brand strategy.
3 Brand Strategy Examples of Billion Dollar Companies with Hyper Growth (>100%)
With the impact of remote working from COVID, several brands, including Peloton, Zoom and Instacart saw huge sales growth increases of more than 100% in 2020, compared to 2019. There are different reasons given for their success, as these brands face keen competition.
- Peloton: $1.8B in revenue for FY2020, up more than 100% from 2019. Peloton has directly benefited from remote working and gym closures. Says CEO James Foley, “The strong tailwind we experienced in March as the COVID-19 pandemic took hold has continued to propel demand for our products into the fourth quarter and first couple of months of Q1 fiscal year 2021.” Peloton’s high price point supports the notion of the brand’s superior quality, so that many consumers find the investment worth it.
- Zoom: While Zoom was already a unicorn valued at $1 billion back in 2017, the brand’s growth dramatically increased in 2020. For the 9 months ending 10/31/20, revenues were $1.8 billion, up more than 300% from $434 million in the comparable period in 2019. Net income was $411 million, up from $7.4 million. Zoom’s “freemium” brand strategy of free pricing for basic services and ease of use enabled trial by consumers, in addition to the traditional large enterprise and SMB customers.
- Instacart: According to the billion dollar plus privately held company, Instacart has penetrated 85% of U.S. households and 70% of Canadian households, and was “on track to process more than $35 billion in grocery sales” in 2020 (prediction was made in May). With 128 million US households, that would imply 109 million Instacart households (if the penetration reported is correct). There is a $99 annual Instacart Express option for “regular grocery delivery users” or a service fee of at least 5% and a delivery fee of $3.99 for non-members. The 5% service fee alone would imply revenues of $1.8 billion on the $35 billion for Instacart in 2020, and if 25% of its members opt for Instacart Express, that would imply $2.5 billion in revenues from membership fees. Sales increases were estimated at more than 500%. Instacart delivers choice, convenience, safety and freedom from schlepping heavy groceries to its customers.
3 Brand Strategy Examples of Billion Dollar Companies with Strong Growth
Several brands that were already larger than $1 billion grew notably in 2020, including Riot Games, Amazon and Costco.
- Riot Games: Los Angeles based Riot Games (owned by Tencent) became known with its initial offering: League of Legends. 2020 revenues for League of Legends were reported at $1.7 billion by SuperData, up 13% from 2019. This 2020 growth represented a turnaround, as the height of League of Legends’ revenues was in 2017 at $2.1 billion. Riot has diversified with several new brand franchises, including Valorant and Legends of Runetana. Reportedly, Riot’s primary revenue model is in-game purchases, with free-to-play games. Like other gaming companies, Riot benefited from the 20% industry growth in 2020, with continued growth predicted by Newzoo in 2021.
- Amazon: Full year 2020 sales for Amazon were $386 billion, with operating income of $23 billion. All business segments grew from 28% to 57% compared to the prior year. The $45 billion AWS cloud business continued to deliver the majority of operating income (59%), while the much larger and better known $235 billion North American retail delivered 38% of operating income. International makes up the balance, at $105 billion, accounting for just 3% of operating income. Back in 2017, we highlighted that much of Amazon’s profits (56% at the time) comes from the AWS cloud business. Amazon’s convenience, variety and pricing meant that more than 50% of product searches started on Amazon in 2020.
- Costco: Costco’s fiscal 2020 ended on August 30, 2020 with net sales of $163 billion, up 9% from fiscal 2019. The retailer highlighted 91% e-commerce sales growth in fourth quarter, and noted that, “While e-commerce is gross profit accretive, the channel is gross margin dilutive.” Costco reported operating income of $5.4 billion, up 13% from the same period in 2019. Membership fees accounted for $3.5 billion or 2% of total revenues, growing 6%. This fact means that existing customers likely drove more of the net sales growth.
In addition to tapping into consumer need for at-home services and delivery, brands today are under greater scrutiny for how they operate within their communities and with their stakeholders, customers, employees, suppliers, and neighbors. As one of several recent brand strategy examples, Pearl Milling Company is the new brand name that PepsiCo recently chose for Aunt Jemima.