Monday, May 25, 2009

Rising from the dead in an overpopulated world

I got an email yesterday from, presumed dead, Circuit City online. Apparently, Circuit City sold their brand name to Systemax Inc. The site looks pretty much the same as it used to. So, where's the value here?

There are discount electronics sites aplenty out there:, Tiger Direct, New Egg, and Amazon. Plus there's still Best Buy and Walmart.

While the major driving force behind Circuit City (as well as CompUSA and Tweeter)'s demise was the diminishing returns of brick-and-mortar stores in an increasingly online marketplace, the online marketplace is pretty tight as well. Yes, the overhead of an online concern is much less impinging on the bottom line than that of a physical presence. However, how popular was Circuit City online prior to the bankruptcy? Wasn't one of the few redeeming features of the site the fact that you could order online and go pick up your item that very day from the physical store?

There were two famous online stores who closed and reopened under new management. Both of which seem to be doing o.k. at this time. (remember the sock puppet dog?) was picked up by PetSmart. died in 2000, but came back in 2002.

Here's the interesting thing about Systemax: They own Tiger Direct. They had also picked up the CompUSA brand. So, ultimately, they are not adding much overhead to their business, merely front-ending their supply chain with yet another brand.

Perhaps the floundering newspaper industry will follow this model. As actual physical papers shut down their printing presses, perhaps large online news services will offer localized versions of their content to online subscribers.

Isn't economics interesting?

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