Circuit City 2008 Annual Report Download - page 9

Table of Contents
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
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