Circuit City 2010 Annual Report Download - page 8

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.
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