The Banking and Strategy Initiative

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Where will circuit city business migrate?

Circuit city is shutting down a business with annual online sales of $1.2. to $1.4 billion and over 2000 stores. In fact currently, over 568 stores are trying to start a close out sale and get rid of leftover inventory.

Circuit city is a definite better than average , but still a recent player in ecommerce and not much of its sales were consummated online. However, it did have a visible brand presence online and probably that is being noticed by some analysts.

Our esteemed colleagues at JP Morgan – Khan avers however that this business will all go to Amazon. I think that is not possible because of some pretty good and some rudimentary reasons that I think are the drivers of online business and the booms and the busts.

Online business will keep growing at Amazoon, but the crisis at Circuit city means that because of its very specific and the awesome ‘Come home America’ positioning this business might remain the purview of ebay and brick and mortar stores.

For Amazon, business drivers are no loadng of shipping cots and impeccable seamless customer service. Given the nature of their electronics business, they are like other online stores a little stymied in the range they can provide and the typical American would love to stay with a Walmart that has extended its range and corrected its pricing in tune with the market. The Amazon business will continue to grow because of its robust business model and attention to customer choice and efficient supply chain and delivery mechanics. Thus it would not borrow from the business of a Circuit City which was looking more to get the customer to come and pick up the merchandise from its own stores.

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This entry was posted on February 4, 2009 by in Financial Markets, US and tagged , , .

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