Egghead Software: Difference between revisions

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Egghead Software was founded in 1984 as a computer software retail company. It grew into a chain with over 200 stores in the United States, and a few in Canada, primarily located in shopping malls. Faced with declining revenues, in 1998, the company shifted its focus to online business, closing its retail locations and selling entirely through its egghead.com website. Egghead.com was purchased by OnSale.com in 1999 and assumed the name Egghead.com.

Egghead was hurt by a December of 2000 revelation that hackers had accessed its systems and potentially compromised customer credit card data. The company filed for bankruptcy in August of 2001. After a deal to sell the company to Fry's Electronics for $10 million fell through, its assets were acquired by Amazon.com for $6.1 million.

Bricks-and-Mortar Period (1984 - 1998)

Egghead was successful from the early days, expanding from a single store in Seattle to a 200 store chain, with locations primarily on the West Coast. An 1989 newspaper promotion in the Los Angeles area announcing the grand opening of the Pasadena, CA store offered a coupon offering customers a free 5 ¼” 360k disk for showing up - at the time an unprecedented offer. Customers were lined up out the doors and down the block, an indication of the insatiable desire for software in the booming personal computer market.

A feature of Egghead’s business strategy was the elimination of salesmen’s commission on most sales in order to focus on quality rather than sales volume. Early on, the company focused on repeat business, customer service and sales integrity. Egghead easily became the premier retail vendor of software and peripherals in the United States. Egghead sold more Microsoft product than any other US vendor for a number of years and enjoyed distinctly favorable pricing as a result.

Among other things, Egghead's customers could sign up for a CUE (Customer Updates and "Eggs"tras) Card, a card that would guarantee a slightly reduced price on certain items, while at the same time tracking user purchases.

Internet Period (1998 - Present)

Several years into the business expansion, the original founder (Victor Alhadeff) went into semi-retirement, bringing in management ‘experts’ such as George Orban. After a huge run up in internet stocks (1997-1999), and facing declining margins from increased manufacturer pricing as well as increased competition form so-called “Superstores”, Orban believed wrongly that Egghead could close all stores and move strictly on the internet. In the process, he took a $350M business and shortly turned it into bankruptcy, after also having relocated the entire Administrative offices from Seattle to Spokane, Washington. With continuing expenses, overt marketing failures, and the closure of personalized store front shops, the large chains moved in. Microsoft, among others, distanced itself from Egghead by reducing favored prices, and the end was near.

Although others would characterize the situation as too much growth vs. declining sales, the view from the bottom was that Management implemented stricter controls that went against previously established Customer Service principles. Retail prices were raised, stores closed, return policy tightened and advertising curtailed. However, Management continued to incur self-interested costs of new offices, home loans, relocation costs and other executive perks, as per mandatory financial disclosures.

The stock plummeted and the company drifted off to bankruptcy court, sinking lower until it became a mere banner ad on Amazon.

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 A feature of Egghead’s business strategy was the elimination of salesmen’s commission on most sales in order to focus on quality rather than sales volume.  Early on, the company focused on repeat business, customer service and sales integrity.  Egghead easily became the premier retail vendor of software and peripherals in the United States.  Egghead sold more Microsoft product than any other US vendor for a number of years and enjoyed distinctly favorable pricing as a result.
-Among other things, Egghead's customers could sign up for a ''CUE (Customer User Experience) Card'', a card that would guarantee a slightly reduced price on certain items.
+Among other things, Egghead's customers could sign up for a ''CUE (Customer Updates and "Eggs"tras) Card'', a card that would guarantee a slightly reduced price on certain items, while at the same time tracking user purchases.
 == Internet Period (1998 - Present) ==