Egghead Software
Encyclopedia
Egghead Software was founded by Victor Alhadeff in 1984 as a computer software
retail company. It grew into a chain with over 200 stores in the United States
, and a few in Canada
, primarily located in shopping mall
s. Faced with declining revenues, in 1998, the company shifted its focus to online business, closing its retail locations and selling entirely through its Egghead.com website.
Egghead.com merged with online auctioneer OnSale.com in 2000 and assumed the name Egghead.com.
Egghead was hurt by a December 2000 revelation that hackers had accessed its systems and potentially compromised customer credit card
data. The company filed for bankruptcy in August 2001. After a deal to sell the company to Fry's Electronics
for $10 million fell through, its assets were acquired by Amazon.com
for $6.1 million.
Egghead was successful from the early days, expanding from a single store in Bellevue, Washington
to a 200-store chain, with locations primarily on the West Coast.
A 1989 newspaper promotion in the Los Angeles area announcing the grand opening of the Pasadena, California
store offered a coupon offering customers a free 5¼" 360k disk for showing up – at the time an unprecedented offer. Customers were lined up out the doors and down the block, an indication of the insatiable desire for software in the booming personal computer market.
A feature of Egghead's business strategy was the elimination of commissions on most sales in order to focus on quality rather than sales volume. Early on, the company focused on repeat business, customer service and sales integrity. Egghead easily became the premier retail vendor of software and peripherals in the United States. The company sold more Microsoft product than any other U.S. vendor for a number of years and enjoyed distinctly favorable pricing as a result.
Among other things, Egghead's customers could sign up for a "CUE" card (for "Customer Updates and 'Eggs'tras") that would guarantee a slightly reduced price on certain items, while at the same time tracking user purchases.
The board brought in George Orban as CEO, a man with retail experience in building the businesses of Ross Stores, Devon Stores, and Office Mart. George Orban was chairman of the board as well as a major stockholder.
After a huge run up in Internet stocks (1997–1999), and facing declining margins from increased manufacturer pricing as well as increased competition from so-called "superstores", Orban closed all 250 of its loss-generating retail stores to focus entirely on its small, but profitable and growing, web business in January 1998.
The decision to close all retail stores was unprecedented, but bolstered by market research and a belief that web sales represented the future.
Even as its retail outlets closed, Egghead expanded its online offerings with the purchase of Surplus Direct.
In response, Onsale.com, a struggling online auctioneer, merged with Egghead to form Egghead.com in 2000.
Onsale CEO Jeff Sheahan and president Jerry Kaplan assumed the same roles for the merged company, and Orban was named chairman of the board.
(Kaplan later became co-chairman.)
In December 2000, the company's IIS-based servers were compromised, potentially releasing credit card data of over 3.6 million people.
In addition to poor timing near the Christmas season, the handling of the breach by publicly denying that there was a problem, then notifying Visa, who in turn notified banks, who notified consumers, caused the breach to escalate into a full blown scandal.
Although Egghead had more PC software sales experience than most any other retailer, having been in business with outlets across the nation since PCs became popular in the mid-1980s, and having pioneered Internet software and hardware sales, they were nevertheless out-resourced and taken over by the publicly traded giant Amazon.com. Sales were simply not enough to sustain the business in the face of such a multi-national giant, their stock plummeted, and the company went into bankruptcy. In 2001, Amazon purchased Egghead for $6.1 million. Egghead.com now redirects to Amazon's software pages.
Computer software
Computer software, or just software, is a collection of computer programs and related data that provide the instructions for telling a computer what to do and how to do it....
retail company. It grew into a chain with over 200 stores in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, and a few in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, primarily located in shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s. Faced with declining revenues, in 1998, the company shifted its focus to online business, closing its retail locations and selling entirely through its Egghead.com website.
Egghead.com merged with online auctioneer OnSale.com in 2000 and assumed the name Egghead.com.
Egghead was hurt by a December 2000 revelation that hackers had accessed its systems and potentially compromised customer credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
data. The company filed for bankruptcy in August 2001. After a deal to sell the company to Fry's Electronics
Fry's Electronics
Fry's Electronics is a big-box store and retailer of software, consumer electronics, computer hardware, with in store computer repair and custom computer building services and household appliances with a chain of superstores headquartered in Silicon Valley...
for $10 million fell through, its assets were acquired by Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
for $6.1 million.
Brick-and-mortar period (1984–1998)
Bellevue, Washington
Bellevue is a city in the Eastside region of King County, Washington, United States, across Lake Washington from Seattle. Long known as a suburb or satellite city of Seattle, it is now categorized as an edge city or a boomburb. The population was 122,363 at the 2010 census.Downtown Bellevue is...
to a 200-store chain, with locations primarily on the West Coast.
A 1989 newspaper promotion in the Los Angeles area announcing the grand opening of the Pasadena, California
Pasadena, California
Pasadena is a city in Los Angeles County, California, United States. Although famous for hosting the annual Rose Bowl football game and Tournament of Roses Parade, Pasadena is the home to many scientific and cultural institutions, including the California Institute of Technology , the Jet...
store offered a coupon offering customers a free 5¼" 360k disk for showing up – at the time an unprecedented offer. Customers were lined up out the doors and down the block, an indication of the insatiable desire for software in the booming personal computer market.
A feature of Egghead's business strategy was the elimination of commissions on most sales in order to focus on quality rather than sales volume. Early on, the company focused on repeat business, customer service and sales integrity. Egghead easily became the premier retail vendor of software and peripherals in the United States. The company sold more Microsoft product than any other U.S. vendor for a number of years and enjoyed distinctly favorable pricing as a result.
Among other things, Egghead's customers could sign up for a "CUE" card (for "Customer Updates and 'Eggs'tras") that would guarantee a slightly reduced price on certain items, while at the same time tracking user purchases.
Internet period (1998–present)
Several years into the business expansion, the original founder, Victor Alhadeff, went into semi-retirement.The board brought in George Orban as CEO, a man with retail experience in building the businesses of Ross Stores, Devon Stores, and Office Mart. George Orban was chairman of the board as well as a major stockholder.
After a huge run up in Internet stocks (1997–1999), and facing declining margins from increased manufacturer pricing as well as increased competition from so-called "superstores", Orban closed all 250 of its loss-generating retail stores to focus entirely on its small, but profitable and growing, web business in January 1998.
The decision to close all retail stores was unprecedented, but bolstered by market research and a belief that web sales represented the future.
Even as its retail outlets closed, Egghead expanded its online offerings with the purchase of Surplus Direct.
In response, Onsale.com, a struggling online auctioneer, merged with Egghead to form Egghead.com in 2000.
Onsale CEO Jeff Sheahan and president Jerry Kaplan assumed the same roles for the merged company, and Orban was named chairman of the board.
(Kaplan later became co-chairman.)
In December 2000, the company's IIS-based servers were compromised, potentially releasing credit card data of over 3.6 million people.
In addition to poor timing near the Christmas season, the handling of the breach by publicly denying that there was a problem, then notifying Visa, who in turn notified banks, who notified consumers, caused the breach to escalate into a full blown scandal.
Although Egghead had more PC software sales experience than most any other retailer, having been in business with outlets across the nation since PCs became popular in the mid-1980s, and having pioneered Internet software and hardware sales, they were nevertheless out-resourced and taken over by the publicly traded giant Amazon.com. Sales were simply not enough to sustain the business in the face of such a multi-national giant, their stock plummeted, and the company went into bankruptcy. In 2001, Amazon purchased Egghead for $6.1 million. Egghead.com now redirects to Amazon's software pages.
External links
- Egghead.com Gets Hacked
- Egghead.com: Credit Card Info Safe from Prying Eyes
- Lengthy Egghead investigation costs banks millions
- Details of Alleged 3.7 Million Credit Card Number Theft
- Egghead silent; customers angry
- Egghead.com Becomes Amazon.com Property
- Amazon Buys Egghead in Bankruptcy Deal
- Amazon Relaunches Egghead.com