Business

What Went Wrong At Smile Direct Club?

Published

5 months ago

2023-12-23

Mohammad Ahmad, a 17-year-old from New Jersey, joined Smile Direct Club in October, just a few weeks after the teeth-straightening company filed for bankruptcy.

A sizable discount on the company’s invisible braces and assurances that the financial problems wouldn’t affect business operations, according to him, persuaded him.

However, Mohammad never received the transparent plastic aligners he was promised after the company went out of business in December, putting him and hundreds of other customers in the lurch.

“I basically got scammed,” claimed Mohammad, still looking for a $1,000 (£788) refund from tutoring fees.

What Went Wrong At Smile Direct Club?

It was a humiliating conclusion for the Tennessee-based company, which had previously had a market capitalization of more than $8 billion and had vowed to disrupt traditional dentistry with lower-cost, remotely-supervised care.

The notion won over more than two million customers. Mohammad, who already wore braces, merely wanted to address some minor shifting when he failed to use his retainer as recommended.

But, from the beginning, Smile Direct Club had to defend itself against opponents concerned about its procedures.

It was embroiled in legal battles with business groups representing traditional dentists and orthodontists, who claimed that its remote treatment, frequently provided after customers mailed in impressions of their mouths taken at home, provided inadequate care and accused the company of misleading customers.

Prominent investors, including Hindenburg Research, known for betting against companies, had also expressed concern, accusing Smile Direct Club of “cutting corners” and warning that it would “wind up as a case study in why it’s a bad idea to invest in a company that attempts to fit a complex, dangerous medical process onto a low-cost, high-volume assembly line.”

The firm disputed the charges and called them “the latest in a stream of unevidenced and misleading attempts… to thwart legitimate competition.”

However, it took the threat to its business seriously and moved quickly to quell subsequent bad allegations.

What Went Wrong At Smile Direct Club?

It threatened reporters and academics with legal action and compelled angry customers to sign non-disclosure agreements to receive a refund until a government lawsuit forced it to stop this year.

According to Myron Guymon, president of the American Association of Orthodontists, Smile Direct Club’s troubles eventually caught up with them.

“Orthodontics looks simple but it is a complex medical procedure and should start with an in-person exam and good diagnostic records,” the doctor stated.

Executives of Smile Direct Club did not reply to a request for comment.

The company blamed its demise on typical economic villains: the pandemic and rising prices, which it claimed damaged its manufacturing operation, escalated expenses and squeezed its target clients.

It also highlighted a $63 million award from a court for a contract dispute with its arch-rival and former business partner Align Technology.

But, according to Brandon Couillard, an analyst at Jefferies, deeper issues were at work, noting that the cost of addressing reputational issues – not just about quality but also about customer service – hampered development and caused the loss-making firm to spend too much on advertising.

“It’s not hard to Google and find people who have had a bad experience,” he told me. “As the business matured, people did become more aware of the brand and that wasn’t always a positive experience.”

After a streak of spectacular sales growth, Smile Direct Club’s triumphant 2019 listing on Nasdaq, the US stock market index, proved to be the firm’s pinnacle moment.

It raised over $1 billion and briefly made its young founders wealthy.

However, sales immediately decreased from more than $750 million in 2019 to $470 million last year. More than half of their revenue was spent on advertising to gain new customers. The losses piled up.

When it filed for bankruptcy in September, the company had only $5 million in cash and roughly $900 million in debt.

“It was pretty clear that consumer interest in the brand had been eroding for some time,” said Mr. Couillard.

Investors later accused Smile Direct Club of withholding critical information about its detractors during its 2019 share offering, and the company was sued for violating financial laws.

However, Sanjula Jain, chief research officer at healthcare analytics and research firm Trilliant Health, said Smile Direct Club’s demise is also a reminder of the market’s limits for remote health care, which her team discovered has fallen in almost every area since the pandemic’s peak.

“Consumer behaviours are not changing in the way that a lot of the market and virtual care providers want it to,” she told me. “Will that change over time remains to be seen.”

University of Pennsylvania professor Anna Wexler, who has studied direct-to-consumer health firms, believes there is still a future for remote or partially remote orthodontic care, noting that younger generations, in particular, are dissatisfied with current health care options and seeking more convenient and affordable models.

What Went Wrong At Smile Direct Club?

Her 2020 study of 470 remote orthodontist patients discovered that about 6% were required to return to a regular clinician for follow-up therapy.

However, more than 87% were satisfied with their care and were willing to overlook flaws in exchange for a reduced cost.

The study cautioned that the usage of non-disclosure agreements by Smile Direct Club may have skewed the responses.

On the other hand, Prof Wexler stated that she anticipated it and other companies marketing similar treatments to accept her findings.

Instead, Smile Direct Club threatened legal action, accusing her team of misrepresenting its process and slandering the company.

“I was shocked,” she recounted, noting that her team had taken care not to name any companies.

The conflict, which had not previously been disclosed, was resolved with a letter to the editor.

Prof. Wexler said she was not sorry to see this particular company die, considering its history of attempting to muzzle opponents.

“Maybe if they hadn’t spent so much money on legal counsel they’d be in a better financial state,” she told me.

SOURCE – (BBC)

Business

Microsoft Asks Some Employees In China To Move To Other Countries

Published

5 mins ago

2024-05-16

Kiara Grace

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According to Chinese official media, Microsoft has asked at least 100 employees in China to consider migrating to other nations.

The reports come as tensions between Beijing and Washington deteriorate over technology such as artificial intelligence (AI) and renewable energy.

Microsoft personnel, particularly involved in cloud computing, were recently offered opportunities to work in the United States, Australia, or Ireland, among other nations, according to a report published Wednesday by state-run media The Paper, citing an unnamed source.

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Microsoft Asks Some Employees In China To Move To Other Countries

According to the Wall Street Journal, Microsoft has urged up to 800 employees, most Chinese engineers working on cloud computing and artificial intelligence, to consider relocating. Last year, the Journal reported, citing anonymous sources, that the Biden administration was planning to restrict Chinese corporations’ access to US cloud services.

CNN has contacted Microsoft for comment.

According to a statement from Microsoft (MSFT) that Reuters cited, the company was still committed to China and that giving some employees internal opportunities was part of its regular business.

The business first entered China in 1992, and for decades, it relied on its influential Beijing-based research lab, Microsoft Research Lab Asia, to gain influence.

“Everyone is confused,” an employee told the paper, noting that the impacted employees have less than a month to decide.

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Microsoft Asks Some Employees In China To Move To Other Countries

Yicai, a Chinese state-owned financial media site, reported that over 100 staff were affected. It also said that residents had the option not to move.

The reports come the same week President Joe Biden proposed duties on $18 billion in Chinese electric vehicle imports and other products. Biden stated that he was working to prevent unfair competition from China and the US industry from being decimated.

The two economic superpowers have been at odds in the technological realm for years. In October, the Biden administration restricted the semiconductors that American companies may export to China.

In recent months, the United States has joined with its European and Asian partners to block China’s supplies of advanced chipmaking equipment.

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Microsoft Asks Some Employees In China To Move To Other Countries

Beijing has responded by setting its restrictions on shipments of germanium and gallium, two materials required for semiconductor manufacturing.

SOURCE – (CNN)

Business

Walmart’s Business Surges As Shoppers Hunt For Low Prices

Published

18 mins ago

2024-05-16

Kiara Grace

Businesses ranging from McDonald’s to Home Depot are battling to attract financially challenged customers. However, Walmart is expanding as customers seek low-cost groceries, necessities, and other items.

Walmart reported Thursday that sales at locations open for at least a year grew 3.8% over the previous year. The company upped its sales and profit guidance for the year, indicating that it expects growth to continue.

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

According to retail analysts, the largest retailer in the United States has leveraged its size and purchasing power to keep prices lower than competitors despite rising inflation since the outbreak.

Groceries account for more than half of Walmart’s sales, and analysts at Evercore IRI say the company has profited from its pricing advantage, with prices that are approximately 25% lower than traditional supermarkets.

While low—and middle-income customers have traditionally made up the majority of Walmart’s customer base, the company has expanded to include people earning more than $100,000 per year. It stated that its growth last quarter was “primarily driven by upper-income households.”

Walmart is also seeing growth online. Its digital sales, which included in-store pickup and delivery, increased by 22% last quarter

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

“Most Americans remain uncomfortable with food prices and are still actively looking for ways to keep their spending in check,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Thursday. This has benefited “Walmart’s favor and has allowed the chain to continue to acquire new customers.”

Meanwhile, department stores, home improvement retailers, and other retail groups have suffered as buyers tighten their belts. Fast-food restaurants have also struggled.

Retail sales have declined overall in recent months.

The business stated this week that Home Depot’s sales at locations operating for at least a year declined 2.8% last quarter. McDonald’s reports that some lower-income Americans are eschewing the restaurant in favor of cooking at home.

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

“It’s a challenging consumer environment,” said Ian Borden, McDonald’s CFO, stressing that many people are struggling with inflation, rising interest rates, and shrinking savings.

SOURCE – (CNN)

Business

Japanese Automaker Honda Revs Up On EVs, Aiming For Lucrative US, China Markets

Published

1 hour ago

2024-05-16

Kiara Grace

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TOKYO — Honda reaffirmed its commitment to electric vehicles on Thursday, stating that it will invest 10 trillion yen ($65 billion) through fiscal 2031 to provide EV models globally, including the United States and China.

“Honda has not changed its belief that electric vehicles (EVs) are the most effective solution in the area of small mobility products such as motorcycles and automobiles,” the Tokyo-based business stated.

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Japanese Automaker Honda Revs Up On EVs, Aiming For Lucrative US, China Markets

By 2030, Honda Motor Co. expects battery EVs and fuel cell EVs to account for 40% of worldwide auto sales, with a global production capacity of more than 2 million EVs.

The so-called “0 Series,” a crucial component of Honda’s EV strategy, will be a completely new EV series constructed from “zero,” Chief Executive Toshihiro Mibe told reporters in an online presentation.

The 0 Series will be released in North America in 2026 and then pushed out globally, with seven versions available by 2030. Honda plans to introduce ten EV models in China by 2027, with EVs accounting for 100% of total vehicle sales by 2035.

“We will become a frontrunner in changing lifestyles to attain sustainability goals, not wait for someone else to tackle them,” Mibe told the press.

Despite some rumors of a slowdown in electric vehicle sales in some regions, Honda, which manufactures Acura and Civic cars as well as Gold Wing Tour motorcycles, believes that the trend toward EVs will continue in the long term, becoming dominant in the latter part of the 2020s.

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Japanese Automaker Honda Revs Up On EVs, Aiming For Lucrative US, China Markets

Honda’s desire to pursue battery and fuel-cell EVs looks to contrast with domestic rival Toyota Motor Corp.’s more diverse or “multiple” powertrain strategy, which focuses on hybrids and other models with engines.

Honda is maintaining hybrids in its portfolio as it increases EV output by increasing battery manufacture and making them thinner, with the goal of achieving zero accidents, according to Mibe.

Of the 10 trillion yen ($65 billion) investment in the works, around 2 trillion yen ($13 billion) will go toward software research and development, with another 2 trillion yen ($13 billion) going toward the establishment of full EV value chains in major markets like as the United States, Canada, and Japan.

According to the corporation, around 6 trillion yen ($39 billion) would be allocated to “monozukuri,” or “the art of making things” in Japanese, which includes the construction of next-generation EV production lines, motorcycle electrification, and EV model development.

Mibe emphasized Honda’s multiple agreements, including the one announced earlier this year with Japanese rival Nissan Motor Co. to develop EVs and intelligent driving technology.

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Japanese Automaker Honda Revs Up On EVs, Aiming For Lucrative US, China Markets

Honda stated Wednesday that it has formed an agreement with IBM to collaborate on computer chips and software for future vehicles, satisfying the growing demand for better processing and lower power usage.

“We are steadily and surely moving ahead to be prepared for electrification,” Mibe stated.

SOURCE – (AP)