February 22, 2011, 1:48 PM

PC Mall acquires the assets of web retailer eCost.com

PC Mall spends $2.3 million to acquire the site, including some inventory.

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What remains of online mass merchant e.Cost.com is under new management.

This morning the assets of eCost.com Inc., No. 158 in the Internet Retailer Top 500 Guide, were sold by PFSweb Inc. to PC Mall Inc. for about $2.3 million. The purchase price includes about $1 million in inventory, says PC Mall, No. 98 in the Internet Retailer Top 500 Guide.

Under the terms of the deal, PFSweb, which also provides e-commerce technology, fulfillment and customer service programs to other web retailers, will contract with PC Mall for a short period to provide eCost.com with various services, including technlogy and customer service support. PC Mall, which generated web sales of $379 million in 2010, in the first quarter will merge the assets of eCost.com and OnSale.com, another personal computer and consumer electronics site that PC Mall owns, into a new business unit to be called OnSale Inc.

PC Mall named Robert Rich, co-president of MacMall/onSale, as the unit’s new president. “This acquisition will help us broaden our reach into the consumer market,” says PC Mall CEO Frank Khulusi.

PFSweb acquired eCost.com in February 2006 as an online retailer of discontinued and liquidated computer and electronics products. Over time, PFSweb tried to reinvent eCost.com as a broader mass merchandise site, but the operation struggled financially.

For the 12 months ended Sept. 30, web sales through eCost.com were about $76 million, says PC Mall.

But in its third quarter earnings release, PFSweb said eCost.com for the nine months ended Sept. 30 recorded:

  • Total revenue of $52.9 million, down by 14.4% from $61.8 million for the same period in 2009.
  • Net loss was $1.7 million compared with $1.2 million.

PFSweb CEO Mark Layton says PFSweb will write down about $3 million in intangible assets for eCost.com in the fourth quarter. PFSweb will also now concentrate on its technology, fulfillment and customer care services business.

“By divesting the eCost.com business, we gain greater ability to focus our attention on growing the services business, where we believe our expertise in e-commerce services and existing infrastructure can maximize revenue and profit opportunities,” says Layton.

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