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PC
Connection, Inc.
Rt.
101A, 730 Milford Road
Merrimack, New Hampshire 03054
(603)
683-2000
www.pcconnection.com
Computer Retailers -
Category Directory
Software Retailers -
Category Directory
Sales
$1.3
billion
Business Description
We are a direct marketer of information technology products and solutions,
including brand-name personal computers and related peripherals, software,
accessories, and networking products through our three primary sales
subsidiaries, PC Connection Sales Corporation, GovConnection, Inc., and
MoreDirect, Inc. Our principal customers are small- and medium-sized
businesses, known as SMBs, comprised of 20 to 1,000 employees, governmental
agencies and educational organizations, and medium-to-large corporate
accounts. We sell products through a combination of outbound telemarketing,
field sales, targeted direct mail catalogs, our Internet Web sites, and
advertisements on the Internet and in selected computer magazines. We offer
a broad selection of approximately 100,000 products targeted for business
use at competitive prices, including products from Hewlett-Packard, Toshiba,
IBM, Microsoft, Sony, Epson, Fujitsu, Canon, Iomega, and Apple. Our most
frequently ordered products are carried in inventory and are typically
shipped to customers the same day that the order is received.
We maintain a Web site with the address www.pcconnection.com. We are not
including the information contained in our Web site as part of, or
incorporating it by reference into, this annual report on Form 10-K. We make
available free of charge through our Web site our annual reports on Form
10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and
amendments to these reports, as soon as reasonably practicable after we
electronically file these materials with, or otherwise furnish them to, the
Securities and Exchange Commission.
Since our founding in 1982, we have served our customers’ needs by providing
innovative, reliable, and timely service and technical support, and by
offering an extensive assortment of branded products, through knowledgeable,
well-trained sales and support teams. Our strategy’s effectiveness is
reflected in the recognition we have received, including being named to the
Forbes Platinum 400, the Fortune 1000, and Information Week’s list of Top
500 leading IT Innovators.
We believe that our consistent customer focus has also resulted in the
development of strong brand name recognition and a broad and loyal customer
base. At December 31, 2003, our mailing list consisted of approximately
3,860,000 customers and potential customers, of which approximately 499,000
had purchased products from us within the last twelve months. Approximately
87% of our net sales in the year ended December 31, 2003 were made to
customers who had previously purchased products from us. We believe we also
have strong relationships with vendors, resulting in favorable product
allocations and marketing assistance.
Our business-to-business marketing efforts are targeted to SMBs, government
and educational organizations, and medium-to-large corporate accounts. As of
December 31, 2003, we employed 519 account managers, including 191 new
account managers with less than 12 months of outbound telemarketing
experience with us. Account managers are responsible for managing corporate
accounts and focus on outbound sales calls to prospective customers. We are
continuing to focus on increasing the productivity of our account managers.
We publish several catalogs, including PC Connection®, focused on PCs and
compatible products, and MacConnection®, focused on Apple Macintosh personal
computers, known as Macs, and compatible products. With colorful
illustrations, concise product descriptions, relevant technical information,
along with toll-free telephone numbers for ordering, our catalogs are
recognized as a leading source for personal computer hardware, software, and
other related products. We distributed approximately 32 million catalogs
during the year ended December 31, 2003.
We also market our products and services through our Internet Web sites,
www.pcconnection.com, www.govconnection.com, www.macconnection.com, and
www.moredirect.com. Our Web sites provide customers and prospective
customers with product information and enable customers to place electronic
orders for products. For the fiscal year 2003, Internet sales processed
directly online were $212.1 million, or 16.2% of net sales, compared to
15.3% in 2002. These sales during the fourth quarter of 2003 were $59.1
million, or 16.5% of that quarter’s net sales, compared to 18.1% for the
fourth quarter of 2002.
The Internet supports three key business initiatives for us:
• Customer choice — We have built our business on the premise that our
customers should be able to choose how they interact with us, be it by mail,
telephone, fax, e-mail, or over the Web.
• Lowering transactions costs — Our Web site tools, including robust product
search features, Smart Selectors™, Internet Business Accounts, and special
interest pages, allow customers to quickly and easily find information about
products of interest to them. If customers still have questions, they may
call into our Telesales Representatives or Outbound Account Managers. Such
phone calls are typically shorter and have higher close rates than calls
from customers who have not first visited our Web sites.
• Leveraging the time of experienced Account Managers — Our investments in
technology-based sales and service programs allow our Account Managers to
build and maintain relationships with our customers and help them to solve
their business problems.
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