CDW 2004 Annual Report Download - page 13

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means. We use this information to further refine our marketing strategy and to develop more effective
programs.
E-commerce
We utilize our Web sites and extranets to implement our business strategy. Our objective is to make it easy
for our customers to transact business with the Company and ultimately to enhance our customer relationships.
Our Web sites include many advanced features to attract new customers and produce sales, including more than
100,000 computer products to search and order online, advanced search capabilities, product specifications, and
information on product availability and pricing. During 2004 and 2003, we generated $1.526 billion and
$1.057 billion, respectively, of direct online sales over our Web sites, representing approximately 27% and
23% of total sales, respectively.
We continue to enhance our award-winning, customized Web sites, marketed as CDW@work and
CDWG@work extranets. These sites give customers online access to information such as order and shipping
status, payment details, purchase history and details about their dedicated CDW or CDW-G account team.
Customers may also use their sites to automate technology purchasing procedures, manage software licenses,
inventory asset-tagged items, reprint invoices and retrieve quotes prepared by their account managers. In
addition, we have links between vendors’ Web sites and our own. Many customers use the extranets to gather
product information, including pricing and availability, and then follow up with their account managers to
access the account managers’ knowledge regarding product compatibility and other information.
Sales Activities and Order Fulfillment
Our success is due in part to the strength of the relationships our account managers develop with our
customers by calling existing and potential new customers, providing advice on products, and responding to
customer inquiries. Our account managers are trained in Company philosophies and systems, have in-depth
product knowledge and are motivated to maximize gross profit and provide high levels of customer service.
New account managers are immersed in CDW Academy, our proprietary sales training program, and complete
an intensive sales consulting, product training, systems and customer service curriculum. We seek to build
customer relationships by generally assigning each customer to the account manager who first serves the
customer. Upon subsequent calls to CDW, the customer is directed to their account manager for assistance. In
the spirit of teamwork, account managers are encouraged to cooperate and work together to maximize gross
profit and customer satisfaction.
Each catalog and advertisement distributed by the Company bears a toll-free number and Web site address
to be used by customers in contacting CDW to place a product order. Telephone calls are answered by account
managers who utilize proprietary on-line computer systems to retrieve information regarding product
characteristics, cost and availability and to enter customer orders. Account managers enter orders on-line into a
computerized order fulfillment system which updates our customer purchase history. Computer processing of
orders is performed immediately following the placement of the order and credit approval. We ship most credit
approved orders on the day the order is received. We generally ship products to customers by A.I.T., DHL,
Eagle, FedEx, FedEx Ground, Menlo, United Parcel Service and other commercial delivery services and
invoice customers for shipping charges.
Customers
Sales to our commercial customers accounted for approximately 98% of our net sales for the year ended
December 31, 2004. We are not dependent on any one customer. For the year ended December 31, 2004, our
largest customer comprised only .24% of net sales and our top five customers comprised approximately 1.14%
of net sales. Our corporate customers are primarily small and medium size businesses that generally have less
than 1,000 employees at a single location. We also serve larger corporate customers, including FORTUNE
1000 companies, as either a primary or secondary vendor. CDW-G, which conducts the Company’s public
sector business, focuses on meeting the technology needs of federal, state and local governments, and
educational institutions.