Newegg Masters The Art Of The Pivot

It’s hard to find a major eCommerce retailer that has evolved more than Newegg. After coming out of the post-internet bubble economy of 2001 as a force in the consumer electronics category, it eventually supplemented that business with computer parts and accessories, catering to the DIY tech crowd.

In 2011, Newegg launched a marketplace model where other sellers accessed its eCommerce platform. Then in late 2019, it started testing a unique business model by building a platform to connect its suppliers directly to consumers. For example, if a motherboard reseller that normally sold through the marketplace wanted to bypass Newegg to directly access its audience, Newegg will set up a site and the infrastructure for a fee. According to the company, the program has been in beta for the past six months. It recently completed a successful pilot that achieved a 102 percent year-over-year increase in unique visitors, driving an 87 percent increase in sales during that period.

“First and foremost, it’s important to understand that Newegg’s take on D2C varies in some subtle but very important ways compared to the conventional definition of D2C, which involves brands eliminating intermediaries and selling directly to consumers,” said Newegg’s global CEO Anthony Chow. “And while it may be tempting for brands to recapture margin by selling direct, owning customer engagement from start to finish is easier said than done. Put simply, a lot can go wrong with traditional D2C models, and brands that choose that route can be quite exposed if they don’t have the support and guidance of a seasoned eCommerce partner.”

The company is now in the process of piloting its D2C solution to non-tech brands to see if it can achieve similar growth across a cross-section of product categories. The move follows an April 30 announcement that Newegg – prompted by the pandemic, which lengthened time-to-delivery for customer orders – would be increasing production within its fulfillment network. Newegg said its clients that use Newegg Logistics (the company’s in-house fulfillment network) have avoided supply chain disruptions.

“There will be strong demand for our hybrid D2C solution because it’s ideal for brands that want to connect with customers directly without having to own the entire process and assume all the risk themselves,” Chow noted. “Additionally, the value-driven services that Newegg offers across all areas of the eCommerce spectrum allow our partners to select the items that best serve their individual needs, while leaving out the ones that do not. This offers our brand partners the flexibility to adapt to changes in their business while still having access to scalable solutions.”

The company followed the D2C announcement with the debut of another new service last week called Newegg Bridge. It functions as both an omnichannel contact center solution for suppliers as well as a social media monitoring service. It will help sellers cultivate connections via traditional channels such as Facebook and Twitter, as well as more specialized online forums. Chow noted that for Newegg, eCommerce is much more than a simple selling process, and he expects other players to copy its new model.

“eCommerce is about so much more than offering low prices and shipping orders quickly. Now more than ever, services are at the core of the eCommerce value proposition. This is why we’ve invested so heavily in our expansive portfolio of services,” he said. “As online shopping continues to move in the direction of D2C, it’s essential that our platform continues to evolve as a scalable, efficient eCommerce platform that adapts well to the changing dynamics of the space.”

One of those changing dynamics, of course, is the pandemic. Chow said COVID-19 been a business challenge as well as an opportunity. Newegg experienced a surge in orders from March through May, leading him to be optimistic about the digital shift.

“Inherently, with more online shopping comes more strain on the business operations, and a lot of our partners are now feeling that,” he noted. “This has resulted in several partners experiencing newfound growing pains and looking for solutions to cope with the success. Logistics, customer service and customer retention marketing solutions are all highly sought-after solutions during this timeframe, and we are happy to work with our partners to develop the most robust services we can to ease the burden. This in turn fuels our own development of the platform and service offerings under the D2C umbrella as we explore new ways to cope with future changes and anticipate future needs.”