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Sex Chocolate: A Viral TikTok Product

Tabs Chocolate came on to my radar because of this My First Million Podcast segment:

How Tabs Started

Jake Lewin and Oliver Brocato (both sophomores in college) started Tabs in January 2021. However, they did not launch and start getting sales until December 2021.

Jake and Oliver both had previous experiences in e-commerce, and they were looking for their next product. They came across this TikTok video that received nearly 14M views:

They visited the website for Sextz (www.sextz.com) and noticed that they were barely putting any focus on their e-commerce sales. They noticed an opportunity. They could put their e-commerce know-how behind a product that has the ability to go viral; a big business could be built. 

In January 2021, they thought they could get the product ready and launch in time for valentines day. However, they soon learned that it would take a lot longer to get the formula correct and get their packaging made.

Tabs Chocolate was launched in December 2021.

Their First Viral Video

Tabs Chocolate partnered with Macia Wolf for a TikTok post:

(this is the post talked about in the My First Million Podcast Segment).

This post currently has 6.6M views and 643K likes. The video was posted on January 14th 2022, and that day Tabs generated nearly $50K in sales.

Current Sales Volume

I started tracking Tabs’ sales 18 days ago. In that period of time, Tabs received 1,288 orders (an average of 71 orders per day). If you estimate their average order value to be about $50, this means they will generate a little more than $100K in sales for the month of May.

Tabs has been battling supply issues. They were on per-order until May 2nd. The order I placed on May 7th, took 11 days to be processed and shipped out to me (in total, it took just over 2 weeks for me to receive my order).

Tabs is in the process of getting 120,000 units available for sale by the time summer hits in the United States. This should help speed up processing orders once their inventory is settled.

Lifetime Sales Estimate

Tabs launched on December 20th, 2021. Since then, they have received just over 13,000 orders. I estimate their lifetime average order value to be approximately $44. This gives them an estimated $575K in sales in the past 5 months.

How Are They Driving Sales?

Well, they have had almost all of their social media accounts suspended. They cannot advertise on Google, Facebook, Instagram, and others (it appears their product falls into a banned category for these channels).

Their number one focus has been partnering with influencers (mainly on TikTok). They have numerous influencers create TikTok videos for them with the Tabs product. The influencer posts it on their personal account, and Tabs will repost the video on a network of TikTok accounts that they manage.

On average, Tabs is paying an influencer approximately $100 per 100,000 views.

In February, Tabs was featured in an article on Vice.com: This ‘Sex Chocolate’ Is Going Viral on TikTok for Making People Super Horny. Tabs used LinkBy (https://linkby.com/) to get Vice to write this article (i.e. this was a paid placement).

Oscars Gift

GBK Brand Bar is a pre-Oscar lounge at the Beverly Wilshire Hotel. They curated over $100,000 in gifts for top talent in the industry. Tabs Chocolate was a participating brand at the 2022 GBK Brand Bar. They were able to leverage this opportunity to get photos of celebrities holding their product (whether they are actually allowed to use these photos for promotion is unknown, but they are using these photos on their website).

Sourcing

Tabs Chocolate is being made by Gabriella Chocolates & Confections, located in North Venice, Florida. 

Their packaging comes from China. I have not yet figured out who is making their boxes, but their outer shipping bag comes from Zhuhai Eco Packaging Co.

Quick Hit Fad?

I am curious to see the longevity of this brand. Right now, the novelty of the product allows it to go viral organically. However, will people come back and repurchase (ie do people think this product actually works after trying it?)

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Does Plant-Based Meat DTC Work?

Food and Beverage Direct-To-Consumer — My curiosity quest begins! 

I want to know what is going on in this space: what are the up and coming brands, what are the trends, what is working, and what is not working?

I have looked at a few F&B DTC brands in the past, such as Muddy Bites, Firebelly Tea, and Black Rifle Coffee. However, my curiosity has led me to looking into plant-based meat. 

Stagnant Growth

“The refrigerated plant-based meat category grew at 59% in 2019, 75% in 2020, but in 2021, the category was essentially flat, growing at 1%, ” 

“We believe the hyper exposure of the category early on drove a significant number of consumers to trial plant-based protein products.”

“In fact, trial rates were super high, penetrating 60% of US households, but consumers’ needs simply were not met, and they did not repeat purchases. As a result, the category did not reach expected levels of habituation, had very high lapse rates and very low buy rates.”

These quotes came from Curtis Eugene, president and chief operating officer of Maple Leaf Foods, during their February conference call discussing fiscal 2021 results. 

Beyond Meat and Impossible Burger are probably the two most popular names in the plant-based meat category. In May 2019, both brands saw their brand name be searched over 600,000 times. That was up from about 100,000 searches in November 2018. Today, both brands see about 75,000 searches per month for their brand name.

You can see a similar peak and then die off in the search term “plant based meat”. Monthly search volume for this term starts to increase in May 2019, peaking in January 2020 at approximately 50,000 searches that month. Today, this term is searched approximately 12,000 times per month. 

As stated by Curtis Eugene, it is clear that this category got some initial hype (led by Beyond Meat and Impossible Burger), but the hype did not last long, and interest in this category has died down. And according to The Plant-Based Foods Association, plant-based meat only accounts for 1.4% of total meat category sales in the US.

What Is Happening In The Direct-To-Consumer Space?

Impossible and Beyond both launched and DTC effort in 2020 (obviously, the pandemic forced this). However, both of these brands have since shut down these efforts. The prevailing thought is the revenue through their DTC channel was too little, and the delivery logistics of this type of product were too expensive.

That being said, there are still a few players in this space trying to make DTC work for plant-based meat. I took a look at Simulate (known for their product: Nuggs), Nowadays, Daring Chicken, and Deliciou. To my surprise, none of these companies are generating a ton of a sales through their websites:

Simulate – Averaging 17 orders per day in May

Nowadays – Averaging 25 orders per day in May

Daring – Averaging 12 orders per day in May

Deliciou – Averaging 35 orders per day in May

That means at most, these brands are doing well under $100K per month in sales (which means they are all likely doing less than $1M a year in sales through their website).

Simulate always had a DTC focus. However, I am no longer sure that is the case. You can find their Nuggs in almost any grocery store near you. In June of 2021, Simulate took on $50M of funding. 17 orders a day on their website does not justify that funding. They must be focusing on other channels of growth (grocery stores, restaurants, etc).

Well… Now What?

It does not look like plant-based meat is a good DTC play. We have already seen Beyond and Impossible exit this channel, and from the 4 brands I tracked, it appears they all are struggling to generate enough revenue from this channel to make it viable for them. 

The question now is why? I hosted a Food and Beverage Direct-To-Consumer round table discussion yesterday, and three qualities were brought up as to what makes a good fit for a F&B DTC product:

  1. Is it lightweight?
  2. Does it have shelf stability?
  3. Is it an item that would have re-occurring purchases?

For plant-based meat, the product is not terribly heavy, but it is over 1lb, making shipping costs at least $7-$8 per order. The product does not have great shelf stability (only lasting 10 days when refrigerated). And lastly, the product could be re-ordered regularly, but as we saw from Maple Leaf Foods, they were not seeing customers return and purchase it again. 

Plant-based meat is not a good DTC product based on those 3 qualities.

What Areas Of F&B DTC Interest You?

Are there any brands you are seeing that are catching your eye and making a DTC play? Are you seeing any trends that should be looked at? I am taking suggestions on where to look next in the F&B DTC space!

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Update — Calling My Shot Again: Figs Q1 2022 Revenue Estimates

Victory Lap Time! On April 13th, I predicted that Figs would report $106.6M in Q1 2022 revenue. The consensus among analysts was the revenue expectation would be $117M. On May 12th, Figs released their Q1 2022 earnings. Revenue came in at $110.1M.

My tracking methods led me to a 97% accuracy in predicting their actual revenue numbers.

How Could I Improve This?

There are two factors that I have to estimate to get to their revenue number: Average Order Value and Cancellation Rate.

I have been using their last reported average order value in my revenue calculations. For my Q1 2022 estimates, I used their Q4 2021 average order value (which was $113). Figs average order value for Q1 2022 ended up being $116. If I had used $116 rather than $113, my revenue estimate would have been $109.5M. This would have improved my accuracy to 99.5%.

For the last 8 quarters, Figs’ average order value has grown on average by 4% each quarter (3.5% for the past 6 quarters). Going forward, I will factor in some growth to their average order value to get a more accurate prediction.

The second factor to consider is their cancelation rate. I am able to track how many total orders they receive. However, not all these orders get shipped, and thus Figs cannot consider them in their revenue reporting (pesky GAAP rules). I noticed in Q4 that the number of orders they reported in their revenue was 9% lower than the total number of orders they received. For Q1 2022, I used a cancelation rate of 8.5%. It appears their actual cancelation rate for this period was 8%. I expect to keep this percentage around 8-9% in my estimates moving forward.

Why Did Figs Miss Their $117M Expected Revenue Target?

I am sure you have heard this before: supply chain issues.

Figs had to move a planned product launch out of Q1 because the product could not make it to the fulfillment center in time. These new product launches have proven to be big revenue events for Figs. They have shown that part of their growth strategy is to constantly be running new product launches (new styles, new colors, etc). So, it is a big deal to them when they have to push back a product launch.

Also, two of their most popular items became out of stock in Q1 because the ships their products were on got unexpectedly re-routed while in transit. 

Because of the uncertainty in its supply chain, Figs has now downgraded its total 2022 revenue projection to $510M – $530M from $550 – $560 (the stock market did not like this).

What Is Working For Figs?

First, interest in their product and brand continues to grow. Figs now has 2 million active customers. This is up from 1.5 million active customers a year ago.

Searches for their brand name “Figs” is up 50% year over year (2.169M searches Q1 2022 vs 1.45M searches Q1 2021)

Second, they are seeing strong growth in their product expansion lines. 80% of their revenue still comes from scrubwear sales. However, sales for their lifestyle products are up 81% in Q1 year over year. And sales for their footwear product line in Q1 2022 were greater than all their total 2021 footwear sales.

Lastly, Figs has started its international expansion. In April, Figs did a soft launch in 7 EU countries (Belgium, France, Germany, Italy, Spain, Ireland, and the Netherlands). International sales are up 59% year over year.

April Sales

In April, Figs received a total of 261,020 orders. Applying an estimated 8% cancellation rate, that means Figs will recognize revenue for 240,138 orders. Plugging in an average order value of $117 (modest growth from Q1), Figs will recognize about $28M in revenue for April.

This is significantly down from the March revenue of $45.6M.

I see three options as to why this may be a down month:

  1. Supply chain issues continue to hurt their sales further.
  2. April could be a traditionally slow month for them and this was expected (unfortunately, I do not have their monthly revenue for the first 9 months of 2021).
  3. Starting in April, international sales to those 7 countries listed above, started going through a 3rd party processor (Globe-e). These sales are no longer represented in my tracking of wearfigs.com, and unfortunately, these international orders are now grouped within Globe-e’s orders, and I cannot see how many orders Figs is processing through this international service. 

It could be a combination of all three as well.

I will be back in early July for my Q2 revenue estimation for Figs!

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Banana Ball – The Business Behind The Savannah Bananas

We need to talk about the Savannah Bananas, a baseball team in Savannah, Georgia, that is going viral on social media right now. Yes, I typically only break down e-commerce businesses (and I will break down their e-commerce merchandise sales), but I am just fascinated (and slightly giddy) with the Savannah Bananas that I need to break down this business.

Baseball purist, avert your eyes!

Best Seat In The House, And Bored Out Of His Mind

Jesse Cole is the founder of Fans First Entertainment and owner of the Savannah Bananas. Jesse is a former D1 college pitcher who got injured and could not continue his pitching career post-college. He started his coaching career by joining the staff of a Cape League baseball team (A premier summer baseball league for college players in Cape Cod, Massachusetts). With the best seat in the house (on the bench), he found himself bored out of his mind watching the game.

In 2008 at the age of 23, Jesse became the general manager of the Gastonia Grizzlies of the Coastal Plain League in North Carolina. In 2014, Jesse purchased the team. Under Jesse’s leadership from 2008 to 2015, the Gastonia Grizzlies broke attendance records each year.

In 2015, Jesse became aware of an opportunity to create another team in the Coastal Plain League based in Savannah, Georgia (after the Mets relocated their farm team out of Savannah). In 2016, the Savannah Bananas were born (after letting their fans vote on the team name). 

Starting in 2016, The Savannah Bananas have sold out every game and set several Coastal Plain League attendance records, all because Jesse wanted to make baseball fun.

Stop Doing What Your Customers Hate

Jesse studied his fans’ behavior and learned what they disliked. He didn’t wait for them to tell them what they didn’t like. The fans voted with their actions. Jesse will often cite the famous Henry Ford quote: “If I had asked people what they wanted, they would have said faster horses.”

Jesse would have pictures taken of the crowd during different moments in the game to see when the fans became disinterested. He would focus on those moments to try to keep the fans engaged. He saw no matter what they did, after 2 hours, fans were leaving the stadium. By the fans’ actions, they told him they wanted 2-hour baseball games.

Fans did not like being nickeled and dimed at the stadium after paying for their ticket. So Jesse sold tickets that included all-you-can-eat concessions.

Jesse hated that their fans had to pay service fees on top of their ticket prices. So this led Jesse to buy their ticket exchange, iSportsTix. Originally, Jesse made a deal with iSportsTix, that Savannah Bananas would pay them $3,200 a year to use their system with no additional fees. This no-fee policy grew the Bananas fan base where iSportTix could not handle the demand. So Jesse bought iSportTix. They now handle the ticketing for 8 other independent baseball teams, plus a hand full of minor league hockey teams. Each team pays an annual fee of $4,000 dollars.  

Banana Ball

  1. Every Inning Counts – The team that gets the most runs in an inning, gets a point for that inning. Win the inning, get the point.
  2. Two Hour Time Limit – If the game is tied at the end of two hours, the game will go into a showdown to determine a winner.
  3. No Stepping Out – if the batter steps out of the box, its a strike.
  4. No Bunting – Bunting Sucks. If the batter bunts, they will be thrown of the game. 
  5. Batters Can Steal 1st – If a passed ball or wild pitch happens during any pitch of an at-bat, the batter can take off to first.
  6. No Walks Allowed – If a pitcher throws the fourth ball it becomes a sprint. The hitter will take off running while the catcher has to throw the ball around every defensive player on the field before it becomes live. The hitter can advance to as many bases as he can. The ball does not have to touch the catcher or pitcher. 
  7. 1 on 1 Showdown Tiebreaker – Each team picks one pitcher and one hitter to face off. The defensive team only has the pitcher, catcher and one fielder. If a hitter puts the ball in play, he has to score and make it home to get a point. If the ball is put in play, the pitcher and fielder are allowed to chase the ball and throw it to the catcher for a play at the plate. If the pitcher strikes him out, or gets him out before scoring, he doesn’t get a point. If the batter walks, he takes second and the hitting team will bring in another hitter to the plate. 
  8. No Mound Visits Allowed – Let’s Leep the game moving. No mound visits from the coach, catcher, or any other players. Hype your pitcher up from afar if needed. 
  9. If A Fan Catches A Foul Ball, It’s An Out – Why not let the fans get in on some of the action? Whatever you do, just don’t catch a Bananas Foul Ball.

Jesse is trying to optimize the game of baseball for a better fan experience. However, he cannot do this with his Savannah Bananas baseball team that plays in the Coastal Plain League (they still have to play by traditional baseball rules). So Jesse created Banana Ball that is played by two professional baseball teams, The Savannah Bananas and The Party Animals. 

The clips from these games are the ones you see going viral on social media. This year Banana Ball went on tour, playing 12 games in 6 different cities. All games sold out (nearly 70,000 tickets sold cumulative). And 2 of the games were aired on ESPN!

Metrics of Success

  • The Savannah Bananas have sold out every game at their stadium and have over a 12,000 person waitlist to get tickets.
  • Over 1,000 people are on a waitlist to work for the Savannah Bananas
  • Social media growth last 4 months:
    • Instagram 236% follower growth (from 121K to 409K)
    • TikTok 161% follower growth (from 916K to 2.4M)
    • Twitter 155% follower growth (from 33K to 84.9K)
  • Website traffic – Over 100,000 Monthly Visitors (up from 20,000 monthly visitors)
  • Search Volume – 301,000 monthly searches in March for the term “Savannah Bananas” up from 27,000 searches a year ago!
  • 15 year MLB veteran, 2x World Series Champion, 3x All Stay, Cy Young Award Winner, Gold Glove Winner, Jake Peavy went and pitched for the Savannah Bananas

$10M in Revenue?

I am not sure the Savannah Bananas will get to $10M in revenue this year, but they may be very close. 

Banana Ball Tour – $20 a ticket, 12 sold-out games to a max cumulative capacity of 69,600. That is $1.4M in ticket sales.

Plus two more games added in Kansas City in front of 10,000 people each ($200,000 in ticket sales per game, however this may be split with the other team).

Plus 6 more Banana Ball Home games at the end of the season – $480K

Total Banana Ball 2022 Ticket Sales ~ $2.1M

Savannah Bananas (CPL) Ticket Sales – 24 Home games at $20 per ticket is $1.9M

Online Merchandise Sales – Because of the surge of interest in Savannah Bananas, their website traffic, and merchandise sales have increased. In the past 14 days they have received 2,090 merchandise orders. Their average order value is most likely between $75 – $100. That means on a daily basis, they are generating about $11,000 – $15,000 in revenue from their online merchandise sales.

No doubt they will be faced with some seasonality but its safe to say they could see upwards of $3M in revenue in 2022 from their online merchandise sales.

So far, I have outlined the case for a possible $7M in revenue in 2022. However, there are still a lot of unknowns that I cannot estimate:

  • How much revenue do they bring in from non-all-inclusive concession sales? Alcohol Sales?
  • In stadium merchandise sales?
  • Bananas Academy (The Bananas Academy is a mixture of different camps and training sessions that allows any player form age six to high school to find the perfect fit for them to learn from the Bananas)?
  • Sponsors, partners, and media rights? In 2020, the Savannah Bananas removed all in-stadium advertising. I am not sure if that is still the case or if they have other sponsors. Did the Bananas get paid for the ESPN Airing? Are there other opportunities to monetize their content?

What a Business…

Even if you are a baseball purist, you have to appreciate the business that has been created here. Jesse found a way to get people’s attention and get them interested in what he was doing. He turned people into raving fans of his product and that is why he has over 12,000 people on the waiting list to be able to purchase a ticket.

Jesse also has the business “Bananas For Business”. As it says on their website: “Stop wasting money on marketing and start creating an experience where the customers do the marketing for you.” He is taking the concepts he has built with the Savannah Bananas and helping other businesses create a fan first experience.