EPCorp: Sell on Amazon or
Invest in Our Data?
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HBR Quick Case
The Scenario
The annual budget meeting at Electrical Parts Incorporated (EPCorp) was going poorly.
After growing consistently for decades to almost USD $100 million in annual revenue by
expanding EPCorp’s retail presence, sales were declining despite recent investments in a
direct-to-consumer (DTC) e-commerce website.
Shivani Bahl watched from one of the chairs lining the walls that had been brought in to
accommodate the extra-long meeting roster. Trained as a software engineer, she joined
EPCorp as a liaison between marketing and IT while finishing her MBA. Usually not one to
refrain from speaking her mind—she had often voiced her concerns during the website’s
development that the scope for data warehousing wasn’t aligned with promises that had
been made—it took willpower for her not to break the tense silence as Debbie Sullivan,
EPCorp’s founder and CEO, reviewed the company’s performance.
Fast Facts: EPCorp
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Company: Electrical Parts Incorporated (EPCorp)
Headquarters: Dover, Delaware, USA
Revenue (2023): USD $97.5 million
Key People: Debbie Sullivan, CEO; Shivani Bahl
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The Conversation
Debbie: Our sales have decreased four years in a row, and no one can tell me why. Wasn’t
our new website was supposed to fix this slide?
Everyone averted their eyes and stared at the floor. Finally, Shivani raised her hand.
EPCorp: Sell on Amazon or Invest in Our Data? - by Jacob M. Cook. HBP. 8272-HTM-ENG
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Shivani: I’m concerned we don’t have the proper data infrastructure to predict shifts in
customer behavior. Meta and Google keep changing their algorithms, and privacy laws are
making it harder to understand what’s happening with our individual customers and
campaigns. In effect, we’re just renting our data from them and despite the price, we’re
not getting the full picture of our customer.
Debbie: Doesn’t the new website handle this stuff? We put our entire product catalog
online, and it has been nothing but a money pit.
Shivani: That was a good start, but just having an e-commerce store doesn’t enable us to
win in the age of Amazon and AI. We should consider building our own cloud data
warehouse to anticipate these changes as we’ll have more complete datasets that are
clean and organized. We could then leverage AI tools quickly on top of this infrastructure,
thus saving huge labor costs by being able to diagnose why the business isn’t growing. For
instance, in the first month we could start to predict which Instagram campaigns drive
repeat purchases with our email retention efforts and then identify what product mixes
are bringing in profitable customers to justify ad expenses.
Maria Horowitz, Shivani’s manager, interjected.
Maria: You’re suggesting we spend more money on technology? It could take us years to
see a return on that investment. Why not just put everything on Amazon? We can have
our entire catalog listed on its platform late next month. Imagine the growth we could get
there! Plus, we might be in a commodity business, but we’ve differentiated ourselves on
quality. Our ratings on Amazon relative to our competitors’ will let us charge a premium.
Shivani: Amazon is a potential solution, but it comes with both costs and benefits. They
would collect and use our data and rent it back to us for making a sale while gathering still
more of our data. We also don’t know how Amazon might change the terms of any deal
we make with them. This seems counterintuitive, but our customers’ behaviors may be
shifting. The interplay with our digital marketing campaigns and our massive inventory is
beyond what we can analyze in Excel spreadsheets. We should also plan for how
generative AI might help us predict and capitalize on opportunities across the business.
Debbie: Okay, but we’re a B2B company selling to electricians, not a tech company in
Silicon Valley. I don’t see how AI matters much to our business. I don’t want to invest
further in all this tech or data stuff, and we should start focusing on improving our supply
chain, but I’ll entertain your suggestions if you can make a strong ROI case during our next
monthly meeting. Now, let’s talk about our inventory stock-outs and why we can’t
anticipate these better since we’re leaving money on the table.
Shivani suppressed a smile and thought about how having clean, organized digital data
would let EPCorp run a quick machine learning algorithm to identify opportunities for
EPCorp: Sell on Amazon or Invest in Our Data? - by Jacob M. Cook. HBP. 8272-HTM-ENG
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stock depletions and price optimizations to reduce lost sales while also boosting
profitability.
But that would take time. For now, she had to develop a proposal that might get Debbie
and the executive team to change their minds.
The Ask
Consider the following questions:
1. Should EPCorp sell on Amazon?
2. What should Shivani do now?
EPCorp: Sell on Amazon or Invest in Our Data? - by Jacob M. Cook. HBP. 8272-HTM-ENG
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