Finding an Untapped Niche
Skullcandy is a case study in careful branding and savvy expansion. The company’s headphones found an untapped niche among snowboarders, skateboarders, and action-sports enthusiasts. Originally, the focus of the company was its technology, which combined state-of-the-art headphones with hands-free cellular technology. Quickly, Skullcandy realized its real strength was as a hip, edgy brand that made a fashion statement.
Today, 90% of Skullcandy’s customers don’t even ride, but want to feel like they do—the headphones have become such a hip status symbol that every teenager wants the company’s Skullcrusher, Full Metal Jacket, or Double Agent models.
Skullcandy has also expanded into mass retailers such as Target and Best Buy. But Andrus notes that the company also turned down many retailers, even when it could have used the cash, because it didn’t want to diminish the edge of the brand by making it available in too many places.
“Because we’ve maintained our authenticity, our products are relevant in other parts of the world,” Andrus says. “In Dubai, there aren’t any snow hills, but teenagers and people in their early 20s still want our headphones. We speak to the lifestyle of our customers, who really care about music and brand.”
Better Supply-Chain Management
With its rapid expansion, Skullcandy is now focused on improving supply-chain management. “At one point, we may have set the record for a company with the highest amount of revenues that still operated with QuickBooks,” Andrus says. “We were a little penny-wise and dollar-foolish, not investing in our distribution capabilities.”
In 2008, Skullcandy implemented SAP® Business ByDesign™, the leading integrated on-demand solution for rapidly growing midsize companies, to support its escalating growth. The result was a highly scalable infrastructure, making the company more process-oriented with better supply chain visibility.
“We’re much better at forecasting now,” Andrus says. “We don’t keep too much inventory on hand and we also don’t have sudden shortages that require us to spend a lot of money flying in products rather than [ground] shipping them in. We have a greater ability to be strategic and get our products from point A to point B at the right time.”
Skullcandy is a leading audio brand that reflects the collision of the music, fashion and action sports lifestyles. Our brand symbolizes youth and rebellion, and embodies our motto, “Every revolution needs a soundtrack.” We believe we have revolutionized the headphone market by stylizing a previously-commoditized product and capitalizing on the increasing pervasiveness, portability and personalization of music.
The Skullcandy name and distinctive logo have rapidly become icons and contributed to our leading market position, robust net sales growth and strong profitability and return on our invested capital. We increased our net sales from $9.1 million in 2006 to $118.3 million in 2009, representing a compound annual growth rate of approximately 135%.
We are a company founded on innovation. After our 2003 introduction of Link Technology, a revolutionary product that integrated mobile phones and personal media devices, we began offering headphones with cutting-edge technology by introducing the Skullcrusher, an amplified subwoofer-enhanced headphone. We redefined the headphone market by fusing bold color schemes, loud patterns, unique materials and creative packaging with the latest audio technologies and innovative functionalities. We offer a wide array of styles and price points and are expanding into complementary audio products and accessories.
Rick Alden, the creator of several successful action sports companies and a lifelong industry enthusiast, founded Skullcandy in 2003. Rick has recruited a talented management team that shares his passion for the Skullcandy lifestyle. Our principal offices are located in Park City, Utah and San Clemente, California, which are at the epicenters of some of the best snow peaks, skate parks and surf breaks in the world. We believe these close connections to the Skullcandy lifestyle strengthen the authenticity of our brand and increase the loyalty of our consumers.
Source: Wikipedia: Skullcandy, Facebook: Skullcandy, LegalZoom, SEC: Skullcandy