Assignment 1

E-Business
CIRCUIT CITY
It is American online retailing Store owned by the Systemax ltd. group.

Fenil Gandhi
Roll no.: 105
MBA tech IT
MUMBAI Campus
Index

1) About the Company………………………………………………………………………3

2) Customer Value Proposition……………………………………………………………...3

3) Business Model…………………………………………………………………………..4

4) Revenue Model…………………………………………………………………………...5

5) Marketplace………………………………………………………………………………6

6) Market Strategy…………………………………………………………………………..6

7) Competitors………………………………………………………………………………7

8) Comparative Advantage………………………………………………………………….7

9) Conclusion………………………………………………………………………………..8

10) Executive Team…………………………………………………………………………...8

11) Reference………………………………………………………………………………….9

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About the Company

Circuit City is an American brand that has grown over the years to provide a variety of products
to its customers. It was established way back in 1949 and initiated the electronic superstore
format in the 1970’s and was initially owned by the Wards Company. But it fell prey to the
recent sub-prime crisis and filed bankruptcy in the year 2009. The "Circuit City" brand is now
owned by Systemax, which uses the brand to sell electronics as an online retailer. This resulted
in shutting of all the retail stores under this brand as Systemax liquefied all the assets and turned
Circuit City into a full time online retailer. Prior to its liquidation Circuit City was the 2nd largest
retailer store in the whole of USA after, Best Buy.

CircuitCity.com serves with a wider selection of products than other store or online retailer. A
wide selection of consumer electronic goods, computers, notebooks, netbooks, and all the
accessories required with them are made easily available. They have a huge selection of HDTVs,
DVD and Blu-Ray players, DVRs, Home Theater Systems, GPS Players, Digital Cameras, Hi-
Def Camcorders, Digital Picture Frames and so much more! Plus, we have a greatly expanded
selection of computer components, like computer cases, motherboards, memory and processors –
all the things to upgrade your current system, or build your own. 

Circuit City provides with extremely affordable deals that you fail to find elsewhere. In addition
to their exceedingly low prices, CircuitCity.com offers world-class online content designed to
provide you with the in-depth knowledge an individual may need to make informed buying
decisions. The site features hundreds of professionally produced videos, close-up photographs of
each item, product reviews by customers, and countless educational articles written by experts in
the computer & electronics industry. CircuitCity.com also features product manuals, spec sheets,
brochures and other informational materials to enrich your shopping experience. The site is very
user friendly and the customers can easily browse through it. They understand the eagerness
inside the customer and ship the products as fast as possible.

Customer Value Proposition

It is the benefits that the customer is promised by the merchant on affiliation with the merchant.
Circuit City is a leader in its sector; it has always taken utmost care of the requirements of the
customers so as to achieve maximum customer satisfaction.

- Circuit City provides with the widest range of electronic appliances on a global level.
- It provides with extremely affordable deals to its customers that cannot be found
elsewhere.

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 - It provides instant service to its customers. The products are shipped overnight to the
customers.
- The payment mode is very flexible and simple. It upon the customers to decide whether
they want to pay via the website, via mail or over the phone.
- Circuit City personalizes its web sites according to its registered customer. It tracks an
individual’s buying habit which helps them better to personalize the shopping experience
of the customer.
- Circuit City consistently senses the changes occurring in the market & customer
preferences so as to provide its customers with the best available products.

Business Model

The plan implemented by a company to make sizable profits and also generate income from its
operations is known as Business model.

Basically Circuit City has adopted the Business to Customer approach. Circuit City prior to its
bankruptcy used the Collaborative Click and Brick model. Now post its takeover by the
Systemax ltd. since 2009 it has adopted the E-tailer Business Model.

Click & Brick model is the collaboration of Brick & Mortar and Click and Order i.e. Circuit
City had retail stores all over United States of America & Canada and also it provided its
customers with an online retail store with same products & promotions as at its physical outlets.
This model basically facilitates the customers to shop online as well as offline and helped Circuit
City to provide its customers with the benefits of fast, online transactions or traditional, face to
face service. It helps the customers to check and order a product from any part of the world
resulting in facilitating the customer needs. This approach recognizes what is least obvious about
the virtual transaction, which is that its main advantage is not in the price of the product but in
the services associated with its buy. The customer prefers to buy a laptop from circuitcity.com
whose cost plus overnight delivery charge is essentially same as that of a laptop from an
electronic retail store.

On the other hand post its takeover by Systemax ltd. it straightway adopted the E-tailer model so
as to cut down on costs and also to make up for the losses it suffered during the sub-prime crisis.
As a result of this all the stores across USA & Canada were shut down. Also another reason
being that Systemax ltd. already runs an electronic retail store under the brand ‘Comp USA’.
Hence it did not want a competitor for its own brand which lead to the killing of Circuit City
stores. But still the brand Circuit City is alive with even better promotional offers, affordable
deals and wider selection of products than before. All this is possible due to adoption of the E-
tailer model.

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E-tailer is a retailer which requires internet as a means for the clients to purchase goods &
services i.e. Virtual Merchant. This enables Circuit City to manufacture selling of products over
the web. This model would lead Circuit City to acquire better turn over and have high profit
margin as many overhead expenses with the physical retail shops such as labor, space,
electricity, inventory, etc. can be considerably cut down. Also Circuit City will still be able to
reach its customers worldwide, while still maintaining only a single location for each of its
customer to visit 24 X 7.

Revenue Model

Circuit City mainly adopts two kinds of Revenue Models since it started.

1) Web Catalog or Direct Revenue Model

2) Fee based or Affiliate Revenue Model.

Web Catalog or Direct Revenue Model:

It helps Circuit City to replace the traditional print catalog. As soon as the customer enters
circuitcity.com, the customer chooses the products to be purchased and put it in the cart and
proceeds to e-payments. The payment is made directly between the customer and Circuit City as
there is no virtual middle man in between. This in return helps to save some revenue for Circuit
City. Circuit City also enables the customer to make payments over the phone or via mail. Hence
providing the customers a flexibility in their mode of payment.

Fee based or Affiliate Revenue Model:

Circuit City enables its customers to shop at any site where they are surfing. This is basically
because of the web sites affiliation to Circuit City. Web sites would redirect the customers to
Circuit City for purchase of a product being promoted by them. This would enable the affiliated
web sites to gain a certain % of commission per sale occurred in accordance with the agreement.
This process is also known as Pay per Sale program which is a part of the Paid Way process
under Affiliate Revenue Model.

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Marketplace
Circuit City operates world over but mainly in USA & Canada. Before bankruptcy it operated
567 Circuit City Superstores in USA itself. It was a major player in the Electronic goods market
2nd best to Best Buy. Also it was 3rd to Wal Mart & Best Buy in overall market share and sales.

Net Profit Margin

4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
Circuit City Best Buy Wal-Mart Industry

Marketing Strategy

Circuit City's marketing strategy emphasizes an extensive range of products, cost and new
products. The pricing and selling policies vary as per the market to replicate the competitive
conditions. Their target market is youth, adults (excluding senior citizens) & teenagers mainly,
and their strategy is to keep the prices as low as possible and to provide outstanding service. The
company sells multi featured, superior products which requires knowledgeable sales person.
Hence new salespeople undergo extensive training and require passing the test before taking up
the job. Circuit City has chosen its affiliates and partners very smartly so as to sustain in the
business.

- They had a great leader in the form of Alan Wurtzel. He was humble and self effacing but
was completely dedicated towards the success of the company. Such leaders are more
concerned about the reputation of the company rather than themselves.
- They always had the right people at the right place to contribute to their success.

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 - They always questioned the customers about the services, products, requirements, etc.
and worked upon the feedbacks regularly. They took these feedbacks very seriously and
implemented their strategies accordingly.
- Every year the Circuit City defined a corporate vision. The employees worked hard
towards the fulfillment of the vision which also contributed to the success of the Circuit
City.

Competitors

Wal Mart: It is an American public corporation which runs a chain of highly discounted
superstores with a market share of approximately 20%.

Best Buy: Best buy is the specialist merchant for customer for electronics goods with a total
market share of 19%.

Comp USA: CompUSA is a merchant and reseller of end users of electronics, technology

products & computer services.

Buy.com: Since its inception in 1977 it started dealing in electronics & computers. Later its
expanded into many other categories.

These are some of the major competitors for Circuit City in its market. It will have to pave its
own path in order to sustain itself with the rising competition.

Comparative Advantage

- Circuit City has made buying quicker and also the payments system is very flexible.
- Circuit City has one of the lowest prices quoted for a product in respect to other
competitive stores.
- They have trust built in their clients through their excellent customer relations strategies.
- It provides the customers with their own extended warranty on all its electronic goods.

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Conclusion
It seems that with the progressing trend of online retailing the decision of Systemax to liquefy all
the assets of Circuit City and only continue the online store looks very wise. It helps to save a lot
of money by saving cost of labor, place, electricity, etc. This in turn would result in high profit
margins at least selling price in the market.

After the takeover it would be a difficult task for the current owners to built-in the same trust in
its customers as before, but efforts are being made towards the same direction. The market in
which Circuit City operates varies according to the changing trends. Hence the company will
have to sense the upcoming changes well before its occurrence and be ready for the same. This
would provide tremendous strength to the process of re-establishment of the company.

Executive Team
1) Richard Leeds
Chairman & CEO

2) Bruce Leeds
Vice Chairman

3) Robert Leeds
Vice Chairman

4) Gilbert Fiorentino
Chief Executive - Technology Products Group

5) Larry Reinhold
Chief Financial Officer

6) Tom Axmacher
Vice President and Controller

7) Ben White
Vice President and Auditor

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References
1) circuitcity.com
2) wikipedia.com
3) novelguide.com
4) docstoc.com
5) strategic-business-planning.suite101.com
6) businessknowhow.com

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