CompUSA 2010 Annual Report Download - page 57

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Customer Service, Order Fulfillment and Support
We receive orders through the internet, by telephone, electronic data interchange and by fax. We generally provide toll-free telephone
number access for our customers in countries where it is customary. Certain domestic call centers are linked to provide telephone
backup in the event of a disruption in phone service.
Certain of our products are carried in stock, and orders for such products are fulfilled on a timely basis directly from our distribution
centers, typically within one day of the order. We utilize numerous sales and distribution facilities in North America and Europe.
Orders are generally shipped by third-party delivery services. 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 private label 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. In 2010,
one vendor accounted for 10.0% of our purchases. One vendor accounted for 12.0% and another vendor accounted for 11.3% of our
purchases in 2009 and one vendor accounted for 12.0% in 2008. The loss of these vendors, 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.
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 to entry, with these products being sold through multiple channels of
distribution, including direct marketers, local and national retail computer stores, computer resellers, mass merchants, over the internet
and by computer and office supply superstores.
Timely introduction of new products or product features are critical elements to remaining competitive. Other competitive factors
include product performance, quality and reliability, technical support and customer service, marketing and distribution and price.
Some of our competitors have stronger brand-recognition, broader product lines and greater financial, marketing, manufacturing and
technological resources than us.
Conditions in the market for technology products remaining highly competitive characterized by prevalent discounting of product
sales price as well as free or highly discounted freight offerings to our customers. These actions have and may continue to adversely
affect our revenues and profits. Additionally, we rely in part upon the introduction of new technologies and products by other
manufacturers in order to sustain long-term sales growth and profitability. There is no assurance that the rapid rate of such
technological advances and product development will continue.
Current economic conditions raise additional factors as the loss of consumer confidence in the Company’ s markets could result in a
decrease of spending in the categories of products we sell. It is also possible that as manufacturers react to the marketplace they may
reduce manufacturing capacity and create shortages of product.
Industrial Products
The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution
channels such as small dealerships, direct mail distribution, internet-based resellers, large warehouse stores and retail outlets. We also
face competition from manufacturers’ own sales representatives, who sell industrial equipment directly to customers, and from
regional or local distributors. Many high volume purchasers, however, utilize catalog distributors as their first source of product. In the
industrial products market, customer purchasing decisions are primarily based on price, product selection, product availability, level of
service and convenience. We believe that direct marketing via sales representatives, catalog and the internet are effective and
convenient distribution methods to reach mid-sized facilities that place many small orders and require a wide selection of products. In
addition, because the industrial products market is highly fragmented and generally less brand oriented, it is well suited to private label
products.