Case Study : Wish You Wood is a toy boutique located in the main
shopping strip of a resort town near Piney Lake. People who own cabins near the lake or come to visit the local state park enjoy browsing through the town’s stores, where they pick up pottery, landscape paintings, and Wish You Wood’s beautifully crafted wooden toys. For these shoppers, Wish You Wood is more than a store; it is a destination they associate with family and fun. The store’s owners, Jim and Pam Klein, personally select the toys from craftspeople and toymakers around the world. They enjoy their regular customers but believe selling mostly to vacationers has limited the company’s growth. They decided that the lowest-cost way to expand would be to sell toys online. However, after several years, they had to admit that traffic to the store’s website was unimpressive. Thanks to e-mail and Facebook reminders, they were luring some of their loyal in-store shoppers to the site to make off-season purchases, but few other people looking for toys ever found Wish You Wood online. Jim and Pam concluded that the next-best way to sell online would be to partner with Amazon.com. Amazon’s Marketplace service lets other retailers sell products on Amazon. The Kleins signed an agreement to list the store’s most popular items with Amazon. For example, if a shopper is searching for wooden dollhouses, Wish You Wood’s dollhouses will be included in the search results. A customer who chooses to buy from Wish You Wood places the order right on Amazon’s website. Under Amazon’s participation agreement, the listings must be honest and may not link to Wish You Wood’s own website or invite phone calls from customers. In exchange for giving the products exposure on the site, Amazon charges a monthly fee plus a commission on each sale. Initially, Jim and Pam were thrilled about their decision to partner with Amazon. They tracked each month’s sales and compared them with instore sales. In the first five months, sales jumped 45 percent, mainly because of sales on Amazon. Then, suddenly, sales of popular toy train sets, which were particularly profitable, stopped altogether. Puzzled, Jim visited Amazon to make sure the train sets were still listed. To his surprise, he found that the train set was there, at the usual price of $149, listed right after the same set available directly from Amazon, at $129. He and Pam concluded that shoppers were now buying the product directly from Amazon. It appeared that their store had helped Amazon identify a product consumers value. The Kleins worried that they needed a new strategy. If they matched Amazon’s price, they would lose most of the profit on their most popular items. Wish You Wood was too small of a business to negotiate better prices from its suppliers. If the store didn’t match Amazon’s price, it would continue to lose sales at the Amazon site. Jim and Pam wondered whether they should pull out of Amazon altogether or find a way to continue working with the partner that had become a competitor. They also considered rethinking which toys to offer on Amazon.
1. Prepare a SWOT analysis for Wish You Wood, based on the information given.
2. Using the SWOT analysis, what general corporate strategy would you recommend for Wish You Wood? Should the store continue or change its current approach?
- Note: Paper should be approximately 500-750 words total.
- APA format for your citations when writing up the case.