CompUSA Attempts E-Commerce Comeback

Struggling computer retailer CompUSA, Inc. is attempting to stage a comeback by scrapping efforts to build an online brand and trying to leverage its well-known retail brand name on the Web.

Last year, CompUSA launched Cozone.com in an effort to go head to head with Dell Computer Corp. in the small office-home office (SOHO) market. However, after the site generated sales of just $7.5 million (US$) for the last quarter, CompUSA decided to re-evaulate “the role of Cozone.com in the company’s overall e-commerce strategy.”

Now, following a course that many analysts believe should have been taken in the first place, the company will adopt a “bricks-and-clicks” strategy to maximize its online and offline efforts.

Information is Key

The strategy will focus on allowing customers to use the Web to either buy products for direct shipment or to research prices at local stores and then either place the order for local pick-up or go to the closest store to buy it.

“We will utilize our Web site to give customers the information they need to maximize one of their most precious resources, which is time, while providing online shoppers with the comfort of ordering from a name that they know and trust,” said CompUSA CEO James F. Halpin.

Struggling To Find Role in Market

The company’s about face could not come at a better time. In addition to increased retail competition, the firm has also been forced to reorganize an unprofitable direct sales operation.

As a result, the firm’s revenues dropped from $3.1 billion to $2.7 billion in the six months ended December 25, 1999 versus the same period in 1998. The company says it slashed overhead and dropped numerous unprofitable direct sales accounts, resulting in a decline in direct sales revenues of 59 percent to $218 million last quarter from $369 million a year earlier.

The firm also added that its retail sales have been flat, dropping 1.8 percent in the quarter ended December 25, 1999 versus the same quarter in 1998.

While it remains to be seen whether the new Web initiatives will be successful, the company is certainly on the pathway that most analysts say should be followed by branded retailers that are looking to maximize their presence on the Web.