Many companies evolve, and during this process may innovate or create new outlets of revenue. Egghead was a pioneer from the standard brick and mortar companies to the new wave, now commonplace of so called “brick and click” establishments. The following is a description and documentation of the rise and fall, and later acquisition of egghead by giant online e-business www.amazon.com. The following is a description of the company’s strengths, weaknesses, and highlights over its recent past and comeback as one of the many partnerships made with Amazon. Egghead dealt with a lot of competition and carved a niche for itself in the marketplace, it adapted and evolved as most companies will experience. The advantages, as well as the disadvantages, will be exposed and explained so that we can learn the rise and later pitfalls of the electronic business phenomenon.
From Egghead to Amazon
Many successful companies are ones that are organized. They have unique elements and systems of beliefs that allow them to function within set boundaries. This culture or belief system allows the company to flourish under ideal conditions. Without structure there is chaos. When a business develops its structure and corporate culture we call this a business model. Egghead was no different, and it also has its own strategy when venturing out into industry. Basically a business model is how the company chooses to conduct business in order to make money.
Business models
B2C.
When egghead converted its business practices to an online forum it had to use various business models. The most important for the new online company was business-to-consumer sales. This is basically how most online companies conduct business. The business, in this case egghead.com is selling directly to the consumer who is ordering products from its website. When conducting business solely on the internet, egghead transformed itself from a brick and mortar company, to a brick and click e-retailer.
B2B
Business-to-business is an important aspect to make revenue and to spread the word about a company. It is just as important to deal with other business as it is to customers alike. Many large contract deals are done between business-to-business activities. When this forum of exchange is open, it allows multiple buyers and sellers to come together in a focused area. Egghead formed Elkom, which concentrated its efforts on business-to-business transactions over the internet.
E-business Advantages
During the period of time when egghead decided to make the transition to an online business, the belief was that retail stores were anachronistic, a thing of the past so to speak “Retail is going to die. It’s on its way out” (Miles, 1998). The embarked on the journey towards e-commerce, and had the funds to do so. Egghead had a very strong brand name, great vendor relationships, and a retail culture that would help us take advantage of the Internet opportunity,” (Orban). Egghead was one of the most visited websites when it made the change, MediaMetrix, an online Web site tracking service reported that Egghead.com’s Web sites were the seventh most heavily visited sites in July of 1998 (Ditlea, 1998). It had the advantage of being a well recognized company, and it was able to capture a lot of sales and revenue, Revenues reached $35.1 million in the second quarter of 1998 (Battey, 1998). Egghead enjoyed a strong brand name, great customer service and its ability to lead internet sales for its niche.
E-Business Disadvantages
There is a famous proverb that states “all good things must come to an end”. It is true in business, as well as life. Egghead could not hold onto its domination forever, while it enjoyed profitable years early on it soon had its fair share of problems. New ecommerce companies were emerging and taking advantage of the money that was to be had over the internet. Soon various online companies were popping up all over the place. Online Companies such as www.amazon.com began simply by selling books online. These companies found it an inevitability to branch out into different categories. This began to defer sales from egghead and its specialized offerings. Increased competition, combined with the nations economy lead to a steady decline in sales for egghead.com. It soon began to focus more on the bottom line then the people it was servicing. Customer complaints began to arise, which lead to message boards, bulletins, and a website defaming the once renowned egghead. Some even went to the extent of creating a website entitled www.eggheadsucks.com. It is never easy to forecast these types of changes in industry. That is why it is vital to plan ahead, have contingency plans and always think of your customers first before the bottom line.
Amazon Purchases Egghead
During the time period of eggheads fall from fame, Amazon was an up and coming company. It rated well in customer service, and had good return policies, which was one of the major complains from customers about egghead. Egghead filed for bankruptcy late in 2001, at which time Amazon purchased egghead, as well as its customer data base. Customer information is an invaluable resource for any business, especially online. A lot of money goes into acquiring customers. When egghead was purchased Amazon absorbed its customer list and information for the price of six million dollars. Another reason Amazon would want to acquire egghead, was that during the time of bankruptcy the two online companies were competing head to head. Amazon and egghead alike were competing with companies such as Barns and Noble, Wal-Mart, and Electronic Boutique. It had to gain an advantage and bring in companies to help Amazon spread its own name. Also considering the fact that the one major problem that egghead faced was issues with customer service. Amazon was one of the leaders and top rated companies in this field. So now under the new ownership those who may have felt neglected or frustrated with return policies would come back to enjoy a more favorable, friendly situation under Amazon. To prove the point stated above, once logged onto www.amazon.com at the time egghead was then listed as the main source for electronics. In business the name of the game is brand recognition. People no longer thought of the old egghead but were reminded of the days when it was a customer friendly brick and click establishment.
References
Book
Napier, H., Rivers, O, Wagner, S, & Napier, JB (2006). Creating A Winning E-Business. Boston: Thomson Course Technology.
Website
Markley, R (2000, November). After grounding brick & mortar model, Egghead takes flight as dot-com. Retrieved February 6, 2007, from Internet Retailer Web site: http://www.internetretailer.com/printArticle.asp?id=2897
Gilbert, A (2001, December 18). Egghead.com Bounces back under Amazon. Retrieved February 6, 2007, from Cnetnews.com Web site: http://news.com.com/Egghead.com+bounces+back+under+Amazon/2100-1017_3-277185.html
http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=898283&referral;=8636&_requestid=154609
Journal Article
Lightfoot, W (2003).Multi-channel mistake: The demise of a successful retailer. International Journal of Retail & Distribution Management. 31,
Rayport, J, Dann, J, & Schmultz, R Egghead.com. Harvard Business School Cases, Retrieved Feb 5, 2007, from http://web.ebscohost.com/bsi/detail?vid=9&hid;=4&sid;=19587394-8cce-448a-8f70-072326fd3771%40sessionmgr107.
