Author: Becca McDonald, eCommerce Worldwide
Newegg launched its marketplace in 2010, generating more than $2.5bn in revenue in its first year. It now has over 30 million registered users and attracts both techies and mainstream audiences, listing 20 million SKUs.
Stock sold on Newegg includes computer parts, jewellery, watches and sporting goods and attracts a consumer that often already has a firm idea of what they’re looking to buy. Considered to be somewhat geeky, before opening up to third-party sellers, Newegg still has a reputation for specialising in niche products.
Whilst the 18-35 tech-savvy male demographic still comprises a fair amount of Newegg’s audience, more mainstream retailers shouldn’t rule it out. Out of Newegg's 17 categories, the top four year-over-year were reported to be office supplies, consumer electronics, health & beauty, and automotive1.
Newegg serves both the B2B and B2C markets and freely encourages cross-border trade, with the ‘international seller program’ which allows US sellers to ship abroad and the ‘global seller’ program which helps foreign sellers trade into the US. To qualify, merchants need a valid business license from their native country, certificate of company and product insurance, a signed W8BEN-e (tax reporting) form, bank details to match their business license and a US address for return handling (could be through a third-party). Sellers can receive payments through either PayPal, Payoneer or WorldFirst2.
Newegg describe themselves as 'obsessed with total customer satisfaction', so as you may expect, requirements for vendors are strict and they must be screened before they can start selling. Sellers must have a commitment to excellent customer service, with a dedicated contact who can reply to enquires within one working day and their terms and conditions state that Newegg have the right to make 'discretionary concessions' to appease unhappy customers. They are also known for their fast shipping and 100% of orders are shipped within three working days. If a tracking number isn't updated within this timeframe, then orders are voided3.
Commissions on products range from 10-15% depending on the category and no additional fees, such as payment processing, are charged on top of this. These rates are considerably lower than other marketplaces. However, if your products are low margin you must still keep a keen eye on the mounting costs, combined with shipping fees, in order to preserve profit.
In brief, Newegg represents a good opportunity for e-tailers looking to start in the US, particularly those who specialise in tech, however you must be sure to have the capability to manage customer expectations and the ability to ship products quickly. It is also important to consider that Newegg’s educated audience often know what they are looking for before they arrive on the site, so if you are a new brand you may have to think extra carefully about marketing and product descriptions.