Newegg – Profile
HQ: City of Industry, CA
Management: Simon Hsieh was recently promoted from Strategic Officer to CEO. Former CEO Ken Lam was made Vice-Chairman. The Chairman and founder is Fred Chang. Pior to Newegg, CEO Hsieh was VP of sales and marketing at D-Link.
Business Model: The company sells personal computers, software, components, consumer electronics, and networking/wireless gear via its Web site. It boasts a mind-blowing 400K unique visitors per day who gave Newegg $1B in sales in 2004 and it expects to grow to $1.4B in 2005. The company’s product offerings are really no different than what others offer. The secret sauce is great customer service. Newegg does not outsource support, but hires geeks locally to speak to geeks.
Competitors: TigerDirect, CDW, Outpost/Frys.
Dirt: Newegg expects to open offices in Europe, Canada and Asia and it recently opened offices in Taiwan and China. The company has nailed its market segment in the US but growth abroad is by no means guaranteed as locals might understand their audience better. Still, given Newegg’s success in the US, we doubt they will screw it up. Will the company IPO? Hard to say. Industry margins in distribution are always low and the company does not have investors that it needs to satisfy with a liquidity event.