Circuit City 2001 Annual Report Download - page 6

WWW.TIGERDIRECT.COM, WWW.MISCO.CO.UK, WWW.SIMPLY.CO.UK and WWW.GLOBALINDUSTRIAL.COM, offering a wide
variety of computer, office and industrial products. Many of these sites also permit customers to purchase "build to order" PCs configured to
their own specifications. In 2001 the Company had over $218 million in Internet sales, or 14% of total revenues. In October 2001 the Company
implemented a substantially improved e-commerce platform for certain of its domestic divisions' web-sites. This new software enabled the
divisions to implement an on-line catalog and provides customers with an easy-to-use ordering vehicle.
CUSTOMER AND PROSPECT DATABASE
Systemax has invested consistently and aggressively in developing a proprietary customer and prospect database. This database includes more
than 50 million names. The Company considers its customers to be the various individuals who work within an organization rather than the
business location itself. The customer and prospect database includes detailed information, including company size, number of employees,
industry, various demographic and geographic characteristics and purchasing history. Management believes that this variety and depth of
information on its customers can provide Systemax with a competitive advantage.
CUSTOMER SERVICE AND SUPPORT
Order entry and/or fulfillment occurs at each of the Company's 19 locations. Systemax generally provides toll-free telephone number access to
its customers. The integration of the Company's call centers also provide domestic locations with telephone backup in the event of a disruption
in phone service. In addition to telephone orders, Systemax also receives orders by mail, by fax, by EDI and on the Internet.
Orders generally are shipped by United Parcel Service in the United States and by similar national small package delivery services in Europe,
as well as by various freight lines and local carriers. As a result of the regional locations of the Company's distribution centers, Systemax
estimates that most customers receive their orders (other than custom items, large furniture and large industrial items shipped directly by the
vendor) within one or two business days of the order date.
The Company provides extensive technical support to customers. A database of commonly asked questions which is maintained for each
product is available to technical support representatives, enabling them to respond quickly to similar questions. It also allows product managers
to monitor the effectiveness of the information provided in the catalogs. The Company conducts regular on-site training seminars for its sales
representatives to help ensure that they are well trained and informed regarding the Company's latest product offerings.
DISTRIBUTION CENTERS
NORTH AMERICA
The Company operates out of multiple sales and distribution facilities in North America. Certain of these facilities are linked by a wide area
network management information system. In the event of adverse delivery conditions (such as bad weather) at a location the Company can shift
inbound calls and/or order fulfillment and shipping to an alternative location. Management believes this provides Systemax with important
operating flexibility and protection from possible sales interruptions for its North American businesses.
EUROPE
The Company has sales and/or distribution facilities in eight European countries and a central office near London, England to direct their
activities. The central office is responsible for marketing support, catalog production, financial reporting, logistics and computer programming
support.
SUPPLIERS
The Company purchases the majority of its products and components directly from manufacturers and wholesale distributors. Substantially all
of the European catalog product content is sourced in Europe. For the year ended December 31, 2001, Tech Data Corporation accounted for
15.1% and Hewlett Packard Company accounted for 10.5% of the Company's purchases. No single supplier accounted for more than 10% of
Systemax's total purchases in 2000 or 1999. The loss of any of these vendors, or any other key vendors, could have an adverse effect on the
Company.
Certain private label products are manufactured either by the Company or by third parties to the Company's specifications. Many of these
private label products have been designed or developed by the Company's in-house research and development teams. See "Research and
Development".
MANAGEMENT INFORMATION SYSTEMS
The Company operates management information systems, which the Company has customized for its use. These systems support
telemarketing, marketing, purchasing, accounting, customer service, warehousing and distribution, and facilitate the preparation of daily
operating control reports which provide concise and timely information regarding key aspects of its business. The Company maintains
databases containing over 50 million customer and prospect names and keeps records of historical purchasing patterns in order to prompt sales