CompUSA 2008 Annual Report Download - page 42

7
Industrial™, ArrowStar™and Nexel™.Full-line computer product catalogs offer products such as PCs,
notebooks, peripherals, computer components, magnetic media, data communication, networking and
power protection equipment, ergonomic accessories, furniture and software. Full-line industrial product
catalogs offer products such as material handling products and industrial supplies. Specialty catalogs
contain more focused product offerings and are targeted to individuals most likely to purchase from such
catalogs. We mail catalogs to both businesses and individual consumers. In the case of business mailings,
we mail our catalogs to many individuals at a single business location, providing us with multiple points-
of-entry. Our in-house staff designs all of our catalogs. In-house catalog design helps reduce overall
catalog expense and shortens catalog production time. This allows us the flexibility to alter our product
offerings and pricing and to refine our catalog formats more quickly. Our catalogs are printed by third
parties under fixed pricing arrangements. The commonality of certain core pages of our catalogs also
allows for economies of scale in catalog production.
With the CompUSA acquisition, the distribution of our catalogs increased to 63 million in 2008, which
was 9.5% more than in the prior year. In 2008, we mailed approximately 47 million catalogs in North
America, a 16.2% increase from last year and approximately 16 million catalogs, or 6.5% fewer than
2007, were distributed in Europe.
Customer Service, Order Fulfillment and Support
We generally provide toll-free telephone number access for our customers. Certain of our domestic call
centers are linked to provide telephone backup in the event of a disruption in phone service. In addition to
telephone orders, we also receive orders by mail, fax, electronic data interchange and through the internet.
A large number of our products are carried in stock, and orders for such products are fulfilled on a timely
basis directly from our distribution centers, typically on the day the order is received. We operate out of
multiple sales and distribution facilities in North America and Europe. The locations of our distribution
centers enable us to provide our customers next day or second day delivery. Orders are generally shipped
by third-party delivery services in the United States and in Europe. The locations of our distribution
centers in Europe have enabled us to market into additional countries with limited incremental
investment. We maintain relationships with a number of large distributors in North America and Europe
that also deliver products directly to our customers.
We provide extensive technical telephone support to our Systemax and Ultra brand PC customers. We
maintain a database of commonly asked questions for our technical support representatives, enabling
them to respond quickly to similar questions. We conduct regular on-site training seminars for our sales
representatives to help ensure that they are well trained and informed regarding our latest product
offerings.
Suppliers
We purchase substantially all of our products and components directly from manufacturers and large
wholesale distributors. One vendor accounted for 12.0%, 14.4% and 12.8% of our purchases in 2008,
2007 and 2006, respectively. The loss of this vendor, or any other key vendors, could have a material
adverse effect on us.
Certain private label products are manufactured by third-parties to our specifications. Many of these
private label products have been designed or developed by our in-house product design and development
teams.
Competition and Other Market Factors
Technology Products
The North American and European technology product markets are highly competitive, with many U.S.,
Asian and European companies vying for market share. There are few barriers of entry, with these