Newegg(NEGG)2022-04-28 20:57Business Performance - Newegg Commerce, Inc. processed over 176 million orders and recognized GMV of approximately 742.4 million in gross merchandise value from approximately 1.7 million active customers [178]. - The B2B operations generated GMV of 349.8 million in 2020, indicating significant growth in the business segment [203]. - As of December 31, 2021, the B2C operations generated GMV of 2.3 billion in 2020, reflecting a steady increase in consumer sales [202]. - Newegg's GMV for 2021 was 2.24 billion, accounting for 94.4% of total net sales [303][305]. - Newegg Marketplace generated GMV of 63.5 million, accounting for 2.7% of total net sales [295][305]. - Total visits to Newegg's online platforms decreased to 305.1 million in 2021 from 382.2 million in 2020, while the number of customers increased to 40.3 million [290][289]. - The average order value increased to 301 in 2020 [290]. - Newegg's repeat purchase rate was 31.9% in 2021, a decrease from 32.5% in 2020 [290]. Customer Engagement and Satisfaction - Newegg's Net Promoter Score is 79%, indicating strong customer satisfaction compared to competitors like Amazon and BestBuy [186]. - The company aims to increase customer retention and repeat purchase rates through enhanced customer engagement and marketing strategies [195]. - Newegg has been recognized as the No. 1 "Electronics Online Marketplaces" by Web Retailer in 2021, with 32.6 million visits per month [278]. Product Offering and Expansion - As of December 31, 2021, Newegg had over 3.5 million active customers and offered approximately 38.7 million SKUs across 1,808 categories [176]. - The company plans to introduce new product categories including 3D printers, IoT devices, and automotive accessories to expand its product assortment [190]. - Private label products represented 7.6% of total GMV in 2021, up from 2.6% in 2020, indicating growth in this segment [192]. - The company intends to expand its Rosewill brand offerings in categories such as DIY components, gaming accessories, and IoT devices, aiming for strong growth potential and higher margins [193]. - The company has established partnerships with over 3,250 brand partners, featuring products from well-known brands like AMD, Intel, and Microsoft [179]. - The company sourced merchandise from at least 3,250 brand partners, including major tech brands like AMD, Intel, and Samsung, ensuring competitive pricing and access to sought-after products [280]. Logistics and Fulfillment - Newegg's logistics network achieved over 99.9% average accuracy rate for orders directly fulfilled, with a 98.9% one-business day fulfillment rate in the U.S. and Canada [176]. - The company fulfilled over 27,962 parcels per day on average with a fulfillment accuracy rate of over 99.9% as of December 31, 2021 [231]. - The company operated nine fulfillment centers covering more than 2 million square feet as of December 31, 2021, enabling it to reach approximately 96% of the North American population in two business days [231]. - Virtual fulfillment accounted for approximately 6.1% of direct sales for the year ended December 31, 2021, broadening product assortment [231]. Financial Performance - Net sales increased by 12.4% from 2,376.2 million in 2021, driven by growth in GMV from direct sales and marketplace businesses [314]. - Cost of sales rose by 11.4% from 2,050.2 million in 2021, reflecting the increase in net sales [317]. - Gross profit increased by 19.1% from 326.0 million in 2021, with a profit margin improvement to 13.7% from 12.9% [317]. - Net income for 2021 was 30.4 million in 2020, attributed to increased net sales and improved gross margin [325]. Marketing and Customer Acquisition - The company aims to enhance its brand recognition through marketing campaigns across online and offline channels to drive growth [189]. - In 2021, 84% of the company's traffic was free, compared to 79% in 2020, indicating a significant increase in organic customer acquisition [242]. - The company's spending on paid search engine marketing represented approximately 68% of total marketing spending for the year ended December 31, 2021 [244]. Technology and Infrastructure - The company has a technology infrastructure capable of processing up to 0.75 million orders per day and supporting over 130 million page views daily [250]. - The global research and development team consists of more than 600 IT professionals and engineers focused on innovation and platform upgrades [253]. - The company maintains approximately 1,500 servers and 300 network devices across its data centers to ensure redundancy and reliability [250]. Compliance and Risk Management - The company has implemented a zero-tolerance policy on counterfeit products, ensuring compliance among Marketplace sellers [236]. - The company has adopted a detailed privacy policy to protect customer data and requires user acknowledgment upon registration [255]. - The company recognizes vendor incentives as an offset to marketing expenses or as a reduction of cost of sales, depending on the nature of the reimbursement [364]. Future Outlook - The company intends to pursue strategic partnerships and acquisitions, particularly focusing on expanding its presence in Southeast Asia [198]. - The company plans to finance future working capital requirements through cash generated from operations and financing activities, but may seek additional financing if necessary [346].