In the wake of the consolidations and terminations that have greatly narrowed the pure-play playing field in online CE sales, the reigning Top Three e-tailers —Amazon.com, Buy.com and PC Mall — continue to make gains against their bricks-and-mortar competitors.
Amazon has now achieved the Internet’s Holy Grail of profitability and managed to boost its CE sales nearly 18 percent over its prior year’s tally to $645 million. In the process, the granddaddy of all e-tail raised its TWICE Top 100 CE Retailing ranking from 28 to 25, just ahead of Bose, with its 111 storefronts, and just behind Ultimate Electronics, a mainstay of CE retail.
How’d they do it? According to Frank Sadowski, VP of Amazon’s online CE store, it was largely accomplished the old-fashioned way — through basic blocking and tackling. “The only way to push toward profitability… was to be operationally intense and make sure that our inventory productivity and turns remained at historic highs for electronics,” he explained during the TWICE Retail Roundtable in January.
“In addition, we have had very careful management on the supply chain side. That is the boring part of the business, but it became more important than ever before with the stresses to the marketplace” during the holiday selling season, he said.
Also propelling revenue were huge gains in Amazon’s mobile electronics business, and a big strategic bet that apparently paid off: The concerted pursuit of early adapters — with their taste for high-margin, cutting-edge products — in lieu of a commodity driven, lowest-price proposition. As founder/CEO Jeff Bezos noted, “We have the world’s largest concentration of early adopters and can communicate with them,” using the company’s proprietary personalization technology.
Also enjoying a double-digit CE surge was Buy.com, which grew its electronics business by better than 16 percent last year to $419 million, landing it at 32nd place. The company, which now boasts some 5 million customers and a million largely electronics SKUs, enjoyed a resurgence last year after founder Scott Blum bought out the ailing business and took it private.
His marching orders: Return the e-tailer to its low-price roots (which he publicized in a high profile price war with Amazon) and emphasize CE within the assortment. Other marketing ploys include free shipping with no minimum purchase on selected items, the liberal use of eCoupons, and limited four-hour sales, held during lunchtime and announced to customers via e-mail blasts.
Also enjoying robust business was PC Mall (formerly known as Creative Computers and IdeaMall), whose sales soared 20 percent last year to $294 million, earning it 40th place on the Top 100, up from 43. The gains were partly attributable to accounting, as the results now include sales from its two wholly owned subsidiaries, eLinux.com and eCost.com. Nevertheless, the numbers have also been revised downward to exclude business-to-business sales, which represent an ever-larger portion of the $863 million company.
E-tailers In The Top 100