Smart Move? Systemax Purchases Circuitcity.com for $14 Million

Big news in the internet retail world:  Systemax has purchased CircuitCity.com for $14 million.

Smart move?

Yes.

Systemax also owns CompUSA.com and TigerDirect.com. It is currently number twenty one on the Internet Retailer Top 500 Guide. Rankings are based on revenue generated from online channels in 2008.

Systemax competes with NewEgg.com (#9) and BestBuy (#10).

In 2007 CircuitCity.com generated 1.4 billion dollars of revenue putting it at # 16 on the Internet Retailer 500 list. It had been reported that the online channel had been profitable at the time that Circuit City filed for bankruptcy in January.

If Circuitcity.com, CompUSA.com, TigerDirect.com, BestBuy.com, and NewEgg retained their 2007 marketshare (2007 was the last full year of data I have), Systemax would have a bigger percentage of market then both NewEgg.com and BestBuy.

There have been fewer searches for “circuitcity.com” in the three months since Circuit City filed for bankruptcy.

I anticipate that this will be a good purchase for Systemax that will quickly pay for itself. The domain name, the brand, and the incoming links all have significant value.

Systemax has not announced how they are going to incorporate CircuitCity.com into their business plans. At the time of publication the site is down.

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