January 31, 2007, 12:00 AM

2006 brings more moderate growth for Newegg.com

After years of explosive growth, web sales at online computer retailer Newegg.com were more in line with the rest of the online computer segment in 2006. E-commerce revenues grew by 15%, compared with 30% in 2005.

After years of explosive growth, web sales at online computer retailer Newegg.com were more moderate in 2006.

For 2006, Newegg, No. 10 in the Internet Retailer Top 500 Guide to Retail Web Sites, is reporting e-commerce revenue of $1.5 billion, an increase of 15% from web sales of $1.3 billion in 2005.

In recent years, sales growth at Newegg has been explosive – the site posted $1 billion in online sales just four years after it launched in 2001. In 2004 and in 2005, annual e-commerce sales rose by 30% and 40%, respectively. "Our actual sales versus our projection was slightly below our expectation, but we are quite pleased with our improved product margin growth and this was largely due to our continued focus on product selection, customer support and logistics," the company says.

But the market for online consumer electronics is competitive and Newegg.com is among a number of large online and multi-channel retailers reporting slower growth in 2006. While the chain didn’t break out specific numbers, Best Buy Co., No. 11 in the Internet Retailer Top 500 Guide to Retail Web Sites, reported that web sales grew by 13% last year, while CDW, No. 8 in the Internet Retailer Top 500 Guide to Retail Web Sites, recorded e-commerce revenue of $1.9 billion in 2006, compared with web sales of $1.7 billion in 2005, an increase of 12%.

To maintain traffic and sales Newegg, which averaged 16 million monthly visits in 2006, is adding new features and functions such as customer reviews. The company credits customer reviews as one reason holiday-related sales rose by 40%.

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