July 7, 2010, 3:14 PM

PC Connection plugs in a new consumer strategy

PC Connection is streamlining its business model.

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PC Connection Inc. is streamlining its business model and rethinking parts of its e-commerce strategy to keep pace with a rapidly changing information technology market, chief financial officer Jack Ferguson recently told Wall Street analysts.

Speaking last month in New York at a meeting with analysts, Ferguson said PC Connection, No. 44 in the Internet Retailer Top 500 Guide, has been organized into five major units with each unit serving a distinct customer segment. One unit, PC Connection, now focuses on small- to medium-sized businesses, while another unit—GovConnection—serves local, state and federal government agencies in addition to schools, colleges and universities. MoreDirect now services medium to large corporate customers and Merrimack Services Corp. targets the health care and professional services market. “We’re building a multibrand strategy that leads with solutions selling,” Ferguson told analysts.

But the segment undergoing the most change is PC Connection’s business-to-consumer e-commerce unit. In January, PC Connection launched PC Connection Express as a dedicated unit that focuses on consumers, home office workers and small businesses with fewer than 20 employees. In mid-January, PC Connection also launched PCConnectionExpress.com as a separate web site with nearly two dozen merchandising categories. The new business-to-consumer site features live chat, daily “hot” deals and free shipping on orders over $99, with some restrictions.

To support its new consumer web site and other business-to-business web sites, PC Connection is spending more than $6 million on search engine marketing and other forms of electronic marketing, the company says. “We are building a compelling online experience with an analytics and custom-driven model,” Ferguson told analysts.

A fresh approach to business-to-consumer e-commerce and dedicated units that serve specific niches will help PC Connection capture a greater share of the information technology product and services market and leverage its inventory, which today includes more than 180,000 products and services from about 1,400 manufacturers, Ferguson said.

 For the first quarter, PC Connection, which didn’t break out web sales, achieved:

  • An increase in total sales of 25.1% to $408.26 million from $326.22 million in the first quarter of 2009.
  • Net income of $2.43 million compared with a net loss of $1.61 million in the prior year.
  • An increase in the average order of 25.4% to $1,472 from $1,174.
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