Newegg Cracks Best Direct Set

CITY OF INDUSTRY, CALIF. — Newegg.com, the largest pure-play CE e-tailer, was founded in 2001 with a focus on computer hardware and software, but has since expanded its assortment to include A/V, personal media devices, portable navigation, communications products and other consumer electronics.

According to general counsel Lee Cheng, the company is looking to expand its customer base as well as its assortment. "As we get bigger, we want to broaden our audience. We never reached out to soccer moms, for example, and we also see an opportunity in business-to-business."

The communications efforts are the first for the company, which has grown into a $1.5 billion business largely through word of mouth, while plowing its cash flow back into capital improvements such as proprietary front- and back-end software, a new East Coast distribution facility in Edison, N.J., and a completely redesigned Web site that will launch in the first quarter of 2008.

Cheng said the trick with the mass market expansion will be to avoid disenfranchising its core 6 million registered customers, who tend to view Newegg as a community as much as a retailer. The site's almost cult-like following was fostered by founder and chairman Fred Chang by "exceeding expectations" on service, ship time, assortment and pricing, Cheng said.

Those mandates helped Newegg — named after the Chinese saying for new beginnings — place second out of 10 direct-sell computer dealers in a recent satisfaction survey of 20,000 Consumer Reports readers.