Ikea/Sonos

Part
01
of one
Part
01

Ikea/Sonos

While we were unable to find enough data to estimate the expected unit volume for the rollout of the new joint product line being launched by Ikea and Sonos in August 2019, our research revealed that Sonos expects that millions of the product will be sold in the coming years. We also estimated that the potential market for the product may be about 564.6 million people. Below, you will find more details.

Helpful Findings

  • According to Sonos, the partnership with IKEA has the potential to "introduce millions of new households" to Sonos. This suggests that they expect to sell millions of such product as a result of the partnership.
  • IKEA announced that they embarked on the partnership with Sonos because their research showed that 59% of their customers stated that "the number one factor of creating atmosphere at home is actually music."
  • In 2018, IKEA had 957 million store visits in its 422 stores in more than 50 countries.
  • Given that the company had 957 million visits in 2018, we can estimate that the potential market size for the IKEA/Sonos speaker product could be about 564.6 million people (59% * 957 million) worldwide.
  • The partnership between IKEA and Sonos is expected to launch in August with a table-lamp speaker and a bookshelf speaker that will be sold exclusively in IKEA stores at a price of about $179 and $99 respectively.

YOUR RESEARCH TEAM EMPLOYED THE FOLLOWING STRATEGIES:

To estimate the expected unit volume for the rollout of the new joint product line being launched by Ikea and Sonos in August 2019, we started by searching press releases, news articles, and other industry reports about the new partnership between the company for possible details on the estimated units that were expected to be rolled out. We searched reports from Verge, Tech Crunch, Inc, USA Today, Fast Company, Wired, among others. Although we found details about the partnership and what the companies intend to achieve, we were unable to find any details about the expected unit volume for the rollout or any quantitative metric that would enable us to calculate a reasonable estimate.

Next, we tried to triangulate the data by looking at similar products IKEA has sold in the past and how many of such products were sold. Our research revealed that IKEA sold Bluetooth speakers in the past but efforts to find the total number of units of the Bluetooth speaker it sold was unsuccessful. We searched the company's filings and statistics it releases to the public, as well as media and industry sources such as Seeking Alpha, Forbes, and Wallstreet Journal, but we couldn't find the data. Available data suggest that its Bluetooth speaker sales didn't do too well and may have made them decide to partner with Sonos to offer a better speaker product.

IKEA announced that they plan to integrate the Sonos speakers into table-top lamps and bookshelves initially before incorporating the speaker into more furniture product after analyzing the performance of the table-lamp speaker and the bookshelf speaker. Hence, we tried to find details on the number of lamps and bookshelves IKEA typically sells annually but we were unable to find the data. IKEA only releases sales data segmented by regions, while industry estimates from sources such as Statista only provide estimates for sales of larger segments such as Living Room, Kitchen, Bedroom, Children Product, and Others. Hence, triangulation was not possible with this strategy.

During our research, we also tried to triangulate the data by looking at the expected increase in revenue for either IKEA or Sonos as a result of the partnership. The goal was to use the estimated increase in revenue in the first year and divide it by the average price of $139 (average of $99 for the bookshelf speaker and $179 for the table-lamp speaker) that the speakers are expected to be sold in other to estimate the unit volume for the rollout.

Our research revealed that Sonos briefed its investors that they expected a significant increase in revenue as a result of getting access to the millions of customers that enter IKEA annually. However, no specific quantitative estimate was provided. The company also announced in its first quarter briefing that their second-quarter forecast wasn't as high as expected because the launch of their product with IKEA was deferred to the third quarter, however, no specific quantitative data or estimate on how much they fell short of their target that would have enabled us to triangulate a rough estimate was provided. IKEA didn't provide any relevant comment on revenue from sales of the speaker probably because unlike Sonos, revenue from the initial rollout would be a small fraction of IKEA's over $38.8 billion annually revenue.

Having exhausted several triangulation strategies, we have concluded that there isn't enough information in the public domain that would enable us to triangulate a reasonable estimate of the expected unit volume for the rollout of the new joint product line being launched by Ikea and Sonos in August 2019.
Sources
Sources