CompUSA 2012 Annual Report Download - page 8

In addition to our own e-commerce websites, we have partnering agreements with several of the largest internet shopping and search engine
providers who feature our products on their websites or provide “click-throughs” from their sites directly to ours. These arrangements allow us
to expand our customer base at an economical cost.
Catalogs
We currently produce a total of 13 full-line or direct mail publications in North America and Europe under distinct titles. Our portfolio of
catalogs includes such established brand names as TigerDirect.com™, Global Computer Supplies™, TigerDirect.ca™, Misco®, Global
Industrial™, Nexel™ and Inmac WStore
®. 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-contact. Our in-house staff designs
all of our catalogs, which reduces overall catalog expense and shortens catalog production time. 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.
Continuing our focus on internet advertising, the distribution of our catalogs decreased to 18.5 million in 2012, which was 39.5% less than in the
prior year. In 2012, we mailed approximately 13.0 million catalogs in North America, a 46.4% decrease from last year and approximately 5.5
million catalogs in Europe, or 13.9% fewer than mailed in 2011.
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 2012, no vendor
accounted for 10% of more of our purchases. One vendor accounted for 11.5% and 10.0% of our purchases in 2011 and 2010, respectively. The
loss of these vendors, or any other key vendors, could have a material adverse effect on us.
Most 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 remain highly competitive, resulting in our frequent discounting of product sales price as well
as offering free or highly discounted freight. 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.
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