CompUSA 2007 Annual Report Download - page 48

5
Sales and Marketing
We market our products to both business customers and individual consumers. Our business customers
include for-profit businesses, educational organizations and government entities. We have developed
numerous proprietary customer and prospect databases. We consider our business customers to include
the various individuals who work within an organization rather than just the business itself.
We have established a multi-pronged system of direct marketing to business customers, consisting
primarily of relationship marketers, catalog mailings and proprietary internet websites, the combination of
which is designed to maximize sales. Our relationship marketers focus their efforts on our business
customers by establishing a personal relationship between such customers and a Systemax account
manager. The goal of the relationship marketing sales force is to increase the purchasing productivity of
current customers and to actively solicit newly targeted prospects to become customers. With access to
the records we maintain of historical purchasing patterns, our relationship marketers are prompted with
product suggestions to expand customer order values. In the United States, we also have the ability to
provide such customers with electronic data interchange (“EDI”) ordering and customized billing
services, customer savings reports and stocking of specialty items specifically requested by these
customers. Our relationship marketers’ efforts are supported by frequent catalog mailings and e-mail
campaigns, both of which are designed to generate inbound telephone sales, and our interactive websites,
which allow customers to purchase products directly over the Internet. We believe that the integration of
our multiple marketing methods enables us to more thoroughly penetrate our business, educational and
government customer base. We believe increased internet exposure leads to more internet-related sales
and also generates more inbound telephone sales; just as we believe catalog mailings and email
campaigns which feature our websites results in greater internet-related sales.
Our growth in net sales continues to be supported by strong growth in sales to individual consumers,
particularly through e-commerce means. To reach our consumer audience, we use online methods such as
website campaigns, banner ads and e-mail campaigns. We are able to monitor and evaluate the results of
our various advertising campaigns to enable us to execute them in the most cost-effective manner. As part
of our marketing strategy we advertise manufacturers’ mail-in-rebates on many products we sell and, in
some cases, offer our own rebates. We combine our use of e-commerce initiatives with catalog mailings,
which generate calls to inbound sales representatives. These sales representatives use our information
systems to fulfill orders and explore additional customer product needs. Sales to consumers are generally
fulfilled from our own stock, requiring us to carry more inventory than we would for our business
customers. We also periodically take advantage of attractive product pricing by making opportunistic bulk
inventory purchases with the objective of turning them quickly into sales. We have also successfully
increased our sales to individual consumers by using retail outlet stores. As of December 31, 2007 we had
eleven such retail locations open in North America and four in Europe, with several new retail locations
under construction. With the CompUSA acquisition, the Company will add approximately 16 retail
outlets in 2008, bringing total retail outlets to approximately 26 in North America and Puerto Rico. The
Company expects to selectively add to its North America retail network in the remainder of 2008.
E-commerce
The worldwide growth in active internet users has made e-commerce a significant opportunity for sales
growth. In 2007, we had approximately $915 million in internet-related sales, an increase of $96 million,
or 12%, from 2006. E-commerce sales represented approximately 33% of total revenue in 2007,
compared to approximately 35% in 2006. The increase in our internet-related sales enables us to leverage
our advertising spending, allowing us to reduce our printed catalog costs while maintaining customer
contact.