23 January 2014

TigerDirect Becomes the Latest Retail Giant to Pounce on Bitcoin

Another major online retailer has announced that it is now accepting bitcoin. This time it’s TigerDirect.


TigerDirect, like fellow electronics retailer Newegg, has been teasing about accepting bitcoin for a few months now. The time for teasing is over now, though – Overstock.com began taking bitcoin at the start of the year, a good six months ahead of schedule and surprising many who thought its CEO was merely thinking aloud. Payment processor Coinbase jumped on the case as soon as they heard the speculation, and worked without a break to develop an implementation as soon as possible.


Online electronics retail in the US is reported to be worth $43.8bn a year.


Bitcoinstore, which launched last February as a direct bitcoin-only challenger to the big online electronics retailers, posted a tweet on 30th November with a screenshot of its recent orders:



It’s amazing just how fast our http://t.co/j3L9er1JMl orders pour in each day! #Bitcoin @amazon @Newegg @TigerDirect http://ift.tt/LZfe66


— Bitcoinstore (@Bitcoinstore) November 29, 2013



TigerDirect replied the same day:



How bad do you want it? #RT this and show us…GO! @Bitcoinstore #StayTuned mwahaha hahahah hah ha.


— TigerDirect (@TigerDirect) November 29, 2013



It was duly retweeted nearly 800 times.


On Christmas Day, a company representative replied to a user’s bitcoin request on Facebook with another hint of something to come.


TigerDirect_FBblur


So far, bitcoin has attracted far more attention from the financial world than the world of Big Retail. Many have been curious, but seem to be waiting for better payment (and legal) structures to exist before leaping in. With smaller technology and online businesses like Bitcoinstore paving the way, it made sense for large electronics stores to come next.


But where were they? Shopify announced it would introduce bitcoin payment options for its independent merchants in November. Overstock.com is an online retailer but it deals mainly in household goods, so it was surprising to see its CEO being the first to announce a plan to accept bitcoin. Heads turned even more toward businesses with customers more likely to be bitcoin enthusiasts, like TigerDirect and Newegg.


According to MarketLine research, online retail in the US alone was worth $200.4bn in revenues in 2012. It probably comes as little surprise to discover the electronics segment is the most lucrative of all, its customers supplying 21.9% (or $43.8bn) of that total. Having experienced a compound annual growth rate (CAGR) of 11% between 2008 and 2012 despite the economic hard times, online retail as a whole is projected to grow to $371.4bn by 2017.


Other online retailers are no doubt salivating at the thought of keeping more of that revenue in their own accounts, rather than handing it over to banks and credit card companies. They might, however, want to observe for a while to see how certain bitcoin-related vagaries are handled before joining in.


There are consumer protection issues like how to properly identify and resolve fraudulent purchases, and how such things can be proven. Then there’s price volatility: currently, this is handled by payment processors like BitPay and Coinbase who can instantly convert bitcoin to USD before the price fluctuates. But these online retailers are in a new league, and their revenues on a much larger scale.


If large-scale online retail with bitcoin proves to be successful, it won’t be only other retailers looking on hungrily. The IRS will definitely be looking for its share, and some in government still bristle at the idea of large-scale adoption of a currency not under state control.


TigerDirect, headquartered in Miami, Florida, sells electronics online and through its catalog. It grew from a software retailer in 1989, absorbing both Circuit City and CompUSA along the way. Its parent company, Systemax (which includes TigerDirect.ca) has annual revenues of over $2bn and over 3000 employees.


California’s Newegg has long been a favorite online retailer for technology fans. Launched in 2001, its popularity grew quickly and Internet Retailer Magazine named it one of the Top 10 online retailers in 2004. The company went public in September 2009 and in 2010, generated $2.5bn in revenue. It has been profitable every year of its existence.


It also has local stores, in Canada, China, and Taiwan and operates a number of more specialized stores and brands, including NeweggBusiness.com.


January 23, 2014 at 05:22PM