Schiit Audio: Does it Make Sense to Sell on Amazon?
(6 pages of text)
Schiit Audio was a manufacturer of audio equipment in the Los Angeles, California area. The company, which mainly sold its products directly to consumers, experienced consistent growth in the years leading up to 2015. However, in the summer of 2015, the company’s founder had three major issues to resolve. First, he was devoting half of his time to a marketing agency he had founded earlier and was increasingly feeling that the arrangement was inadequate to provide the leadership his audio company needed. Second, some suppliers were causing inventory and out-of-stock issues that made it difficult to deliver products to customers on time. Finally, selling products on Amazon Marketplace expanded the company’s reach to new customers, but came with drawbacks, including lower margins, high fees, and inventory management difficulties. The founder had to make some decisions for the business venture’s path forward.
This case is suitable for undergraduate- and graduate-level courses on marketing, entrepreneurship, digital marketing, pricing, or distribution channels. This case has also been used in a special topics course on marketing metrics by focusing the discussion on goal setting. More specifically, the case is appropriate for undergraduate entrepreneurship classes that discuss business model development or launching entrepreneurial ventures. At the graduate level, this case is suitable for entrepreneurship classes focused on high growth ventures or identifying and exploring opportunities. After working through the case and assignment questions, students will be able to
- describe the benefits and challenges of the direct-to-consumer model;
- describe Amazon Marketplace’s benefits and challenges for a direct-to-consumer brand;
- quantify the challenges that adding a distribution channel can have on a company’s profit margin; and
- discuss the decisions that business owners face when exploring opportunities to expand, including their own entrepreneurial career decisions.
United States, Small, 2015
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