Newegg.com Adds Wireless Service As Part Of Broader Expansion

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City of Industry, Calif. — Newegg.com, the largest pure-play CE e-tailer, has added wireless phones and services to its assortment through a first-time partnership with AT&T.

The move is part of broader plan to expand the billion-dollar specialty site into new channels and more mass-oriented markets as it enters its seventh year in business.

"This partnership is a special milestone for us as it greatly compliments the strategic framework of products and services available to our customer base," said Anthony Chow, Newegg's business development and emerging technologies VP.

As an authorized AT&T dealer, Newegg has begun offering a large selection of handsets and a choice of calling plans and services. The company also said it is planning several category promotions on the new microsite, located at www.newegg.com/wireless, including exclusive deals on Plantronics Bluetooth headsets.

Newegg said the addition of wireless will further enhance its cross-merchandising abilities and signals its intention to expand into the broader CE market this year. The site was founded in 2001 with a focus on computer hardware and software, but has since expanded to include A/V, personal media devices, portable navigation, communications products and other consumer electronics.

In an interview with TWICE, general counsel Lee Cheng said that 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. Our customers grew up, got jobs and are now placing large orders for their small- to medium-size businesses."

To tap into the B to B channel, Newegg is building an outbound sales force, has begun offering terms and is taking purchase orders. To reach a broader consumer base, the e-tailer will soon begin a test of newspaper ads, and is launching a corporate marketing campaign to get its story out.

The communications efforts are the first for the six-year-old 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 that opens next month 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 (1.8 days on average), assortment and pricing. "We under-promise and over-deliver," Cheng said, aided by the strategic decision to own most of its own inventory for greater control over fulfillment and to provide in-stock status for customers in real time. However, the company is growing its virtual distribution model in select categories like large-screen TVs with select partners to support its expansion.

That mandate has helped make Newegg — named after a Chinese expression for new beginnings — the 18th largest CE dealer according to the TWICE Top 100 retailer rankings, and the second largest pure-play e-tailer in any industry after Amazon.com, Cheng said.

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