In this day and age, it is not unusual for corporate bosses to make appearances on popular online shows. However, this company CEO appears in his own YouTube videos, screwdriver in hand, assembling an entire computer by himself. In this case, the computer is put together entirely from parts and components made in Taiwan. The CEO, Anthony K. Chow, is the head of America’s second-largest exclusively online consumer electronics (3C) retailer, Newegg.

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Brief Bio of Anthony K. Chow
Age: 

• 56 (born 1965)

Education: 

• BA, University of Toledo, Ohio
• EMBA, National University of Singapore

Experience:

• CEO, Newegg
• Vice President, Haier (Shanghai)
• CEO and President, Otto Group (China)
• CEO of China Region, Otto Group (Germany)

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When Anthony K. Chow returned to Newegg to take the helm in 2019, the company was unable to measure up to major competitors like Amazon. Sales were on a downward trend, and the company was experiencing losses year after year.

Chow’s first decision after taking on his new role was to purchase a plane ticket to Taiwan. This unexpectedly became a critical decision that just one year later helped turn the company around.

“Newegg” may be a forgotten name to many people, but Newegg was once as famous as Yahoo (founded by Jerry Yang) and YouTube (co-founded by Steve Chen) as a shining example of Silicon Valley entrepreneurship by individuals of Taiwanese origin.

Fred Chang, born in Taiwan, founded Newegg in the United States in 2001. Specializing in consumer electronics, Newegg is one of America’s oldest e-commerce companies, and was at one time North America’s second-largest online-only retailer, behind only Amazon.

Conservative Newegg failed with its first IPO in 2009, and was acquired a few years later by Chinese company Lianluo Smart, Ltd.

In 2019, Newegg’s net sales of around US$2 billion were even lower than that of a decade earlier.

In 2020, just a year after Anthony Chow took over as CEO, Newegg recorded sales growth of 38 percent, setting a new record and turning losses into profits. And in 2021, in the twentieth year of the company’s founding, Newegg reached the milestone of becoming listed on the NASDAQ exchange.

How has Chow, who is of Chinese ancestry and was born in Malaysia, managed to accomplish all this?

“Newegg was at a crossroads at the time,” Chow recalls. After returning to Newegg in 2019 and reviewing the company’s internals, it became apparent to him that the company’s financial and organizational structure were a mess.

“The corporation needed to be thoroughly restructured.” Most veterans of e-commerce companies founded in the U.S. and China could see that there was only one thing that could save Newegg - supplier relations optimization.

He explains that although the Newegg platform was divided between direct operations and third-party sellers, 80 percent of sales were concentrated in direct operations.

Among Newegg’s 40 million-plus members, nearly 60 percent are specs-oriented tech enthusiasts. So as long as it could stabilize direct-operations business and take good care of its core customers, it should have no difficulty saving the company.

Chow: supplier relations most important priority.

“As soon as I came aboard, I worked on setting up supplier relations,” remarked Chow directly, as the majority of computer suppliers come from Taiwan.

Newegg’s top three suppliers, which account for one-third of Newegg’s purchasing volume, include Asus and Gigabyte from Taiwan.

So in 2019, as soon as he took on his new position at Newegg, Chow personally flew to Taiwan, seeking out his old friends at Asus, Gigabyte, and MSI. “I was admittedly feeling quite anxious at the time,” he recounts Chow.

One of the people that Chow visited with on that trip was LL Shiu, CEO of motherboard heavyweight ASRock. During their conversation, Chow held nothing back about Newegg’s internal issues, and brought up the direction he had in mind for company reforms, including refocusing on DIY computer enthusiasts.

This was completely in sync with ASRock.

Another move was to set up a turnkey service, from logistics to content marketing, in contrast to most platforms that just place goods on the (virtual or real) shelf and let the vendor figure out how to promote it.

Having served as the COO of China operations for German e-commerce group Otto, as well as new retail operations within the Chinese Haier Group, Chow brought China’s innovative approaches to e-commerce to Newegg.

Chow got behind Newegg Partner Service, helping companies listing products to manage social media - from videos of unboxings, DIY tutorials, to producing  instructional videos - as well as managing customer feedback.

Chow even made videos himself, demonstrating just how serious he was.

These well-grounded marketing services provided ASRock, a company that does not interface much directly with consumers, with a lot of food for thought.

ASRock CEO LL Shiu relates that not only does Newegg provide product listings, it even thinks of ways to sell things. This made ASRock more willing to invest more budget in promotional efforts via Newegg, including prioritizing product supply even during times of low demand.

Ample product supply is precisely how Newegg has still managed to guarantee the availability of products to sell, and further set new sales records, even during the largest electronics product supply shortages in history over the past two years.

e-Sports heavyweight MSI especially values Newegg’s social media turnkey operations.

Especially given that Newegg mostly facilitates direct operation, it does not have many bogus reviews. So for both buyers and merchants alike, user feedback is quite important.

MSI specializes in high-end notebook computers, desktop computers, and graphics cards, areas in which users engage in extensive homework before making a purchase. Hou Hsin-liang, director of MSI’s graphics card unit, says, “We look at consumer feedback and make real-time adjustments accordingly.”

“It focuses on thinking about who has accumulated the most consumers.” Dr. Tai Fan-chan, Director General of the International Digital Commerce Research Division at the Commerce Development Research Institute (CDRI), offers that the real key to Newegg’s revival was its renewed recognition that its greatest advantage is the high-value old customers it had accumulated over the years.

According to Newegg’s prospectus, as of September 2021, the average order was valued at US$398.

In contrast, according to figures from U.S. market intelligence firm Numerator, last year the average consumer purchase on Amazon Prime Day was US$47.

This makes Newegg’s core audience at least eight times as valuable per capita than Amazon’s.

This group of long-term customers consists of computer enthusiasts passionate about DIY.

Chow notes that nearly 60 percent of Newegg’s 40 million-plus members are “specs-oriented tech geeks”, 75 of whom are male, and 47% of whom are high earners with an annual income of US$75,000 or higher.

Many American 3C consumers have gotten in the habit over the years of heading to Newegg whenever they shop for electronics.

This group is characterized by “the emphasis they place on C/P ratio, but even more so, high performance and top specs,” says Tai. Most of these high-end installations or parts and components come from Taiwanese vendors, while many low-cost Chinese-made electronics products head over to Amazon. This is the main reason that Newegg is especially focused on Taiwanese suppliers.

Browsing the best-seller ranking on Newegg’s site, five of the top 10 brands in the Notebook Computer category are Taiwanese vendors like MSI and Gigabyte, while all of the top 10 names in the Display category are Taiwanese brands like Asus and Acer.

Newegg’s remarkable comeback in spite of being surrounded by major competitor platforms like Amazon and Walmart demonstrates the importance of focusing on one’s core audience in an era of an increasingly concentrated e-commerce industry.

Newegg projects revenue of around US$2.4 billion dollars in 2021, for profits of US$40 million, marking the company’s second year of profitability in a row since staging its comeback.

“It’s critical to focus on who your consumers are, as now is a time of the most diversified development of e-commerce,” offers Tai.

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Translated by David Toman
Edited by TC Lin
Uploaded by Jane Chen