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Are Sonos Retailers Being Used, Massive Direct Sell Growth

Sonos, who last week appointed a new local distributor, is out spruiking their Best Black Friday Sonos Speaker deals for their Sonos One, Sonos Beam, Sonos Arc, Sonos Move, Sonos 5 & Sonos Amp. The only problem for retailers was that most marketing roads lead to the Sonos online site.

The appointment of Westan will see the Victorian distributor do fulfilment for the specialist channel, with orders taken on the local Sonos website fulfilled by the local Sonos’s own distribution operation in Victoria, which also fulfils for mass retailers.

Now questions are being raised as to why Sonos needs to use two distribution operations, with insiders claiming the appointment of a local distributor could be cheaper for the business in Australia.

Westan was contender to buy the Qualifi distribution operation, prior to Sound United acquiring the Melbourne-based business.

Recently, Sonos admitted that during COVID lockdowns business to their online site has grown “significantly”, with online business now double what it was two years ago and growing.

When Sonos went public in 2018, the manufacturer generated 10 per cent of its revenue from its online store during its fiscal 2017, which ended Sept. 30, 2017.

That amounted to US$99.3 million through its website alone, according to financial records.

Last year, sales direct by the audio manufacturer increased 84.3% and represented 21.4% of their total revenue in fiscal 2020 compared to 12.2% in fiscal 2019.

Overall revenue increased 5% to US $1.326 billion; excluding the impact of the 53rd week in fiscal 2020, revenue increased approximately 3%.

This resulted in the Company generating US$326M in online sales in 2020, which is a big jump from the $99.3M generated in 2018.

The Company has admitted they plan to grow their own e-commerce channel, claiming, “While we seek to increase sales through our direct-to-consumer sales channel, we expect that our future sales will continue to be substantially dependent on our third-party retailers.”

According to retailers selling Sonos product in Australia they are the ones generating the first Sonos product sale, only to find that Sonos is then EDM marketing their customers direct to buy a second product direct from Sonos.

ChannelNews has witnessed this and seen first-hand the EDM marketing that Sonos is undertaking to convert a retail sale to a direct sale.

This is because each and every new Sonos customer has to register their new Sonos product onto the Sonos network to get the Sonos app.

This makes data capture easy for the US company.

According to financial records Sonos is now sold in over 50 countries and in fiscal 2020, 47.4% of their revenue was generated outside the United States.

As of October 3, 2020, Sonos had a total of 31.6 million products registered in approximately 10.9 million households globally, including the addition of more than 1.8 million new households during fiscal 2020.

As of October 3, 2020, 61% of our 10.9 million households had registered more than one Sonos product.

Sonos estimate their customers listened to 10.2 billion hours of audio content.

Last month, Sonos stock fell 18.5%, which was a big drop without any specific bad news.

The company did announce price increases across its product portfolio and they have also admitted they are suffering logistic and manufacturing problems which is impacting sales.

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