When Directron.com was established in 1998, e-commerce was just starting. Traditional distributors and wholesalers were just beginning to sniff out opportunities on the Internet, but Michael Chang, president, decided to take a chance.
Eleven years and $50 million later, Directron.com is known to many as the place to find the newest PC gadgets, scout upcoming PC trends, and buy hard-to-find gadgets that many still need despite the fact that major retailers have stopped stocking them. According to Chang, these abilities have differentiated his e-commerce site from others as a number of PC online distributors have fallen by the wayside.
“We respond to what people need,” said Chang. “We don’t push products at customers. We know some of what we distribute might not make us much money, but we create those SKUs to bring people to our Web site so people can count on us.”
Taking a risk
Directron.com began as a wholesale distributor in 1991 under the name HCCI. Now the Internet division of HCCI, the company operates from a 100,000-square-foot warehouse in Houston, Texas, with additional locations in San Antonio and Dallas. The company’s primary focus is distributing PC hardware and software, but it also handles installations, repair, and other services.
Chang said Directron.com caters to three niches in the retail industry. One is wholesale distribution. Its advantage comes from a relatively long-standing history in the industry, as well as its 100-member inhouse team of experts that have extensive knowledge of products and the PC industry as a whole.
Directron.com’s second niche is supporting vendors, and the third is maintaining enough flexibility to satisfy a wide range of customers, from individuals to large corporations. “We live or die on new and cutting-edge products,” said Chang. “We constantly communicate with our customers to let them know what is new, what’s on the market, and what to anticipate down the road.”
Part of this knowledge comes from Directron.com’s willingness to take a chance on products its vendors launch. Vendors often send the company invitations to visit their facilities and participate in product launches. Although there is a risk involved in spending time and effort on products that might not be fruitful, Chang said he would rather take the risk for the sake of the customers and the vendors.
“We take a chance on our vendors and support them, and they in turn are willing to come to us with new products,” he said. A year and a half ago, vendor ASUS launched its netbook PC, and Directron.com became one of seven distributors in the nation to carry the product and helped push the product to its current success.
“Now we have a history of supporting them ahead of the game, and other distributors are struggling to keep up,” said Chang. “We’ve been one of their top sellers.”
One of the greatest challenges for Directron.com and for the PC industry as a whole is the downtrend of product prices. Whereas it used to cost $1,500 for a PC, today it’s easy to find a full system for under $800.
To maintain the same level of sales revenue, the company is finding it necessary to sell more systems, hard drives, etc. “We probably need between 25% and 30% unit growth to maintain revenue growth,” said Chang. “That’s just the nature of the beast in this industry.”
As a result, the company is varying its product line offering and now includes items such as printers, projectors, and accessories. And as laptop prices continue to plummet, the company is on the lookout for new laptops to add to its inventory.
Another possibility for Directron.com is expanding its project scope outside of Texas. It already has a client in New York that initially approached Directron.com to buy computer monitors. When the client needed a nationwide service provider, the company shipped products for the client directly to its warehouses in New York, Miami, and Dallas.
“We can become a distribution facility for our customers’ locations so they don’t have to pay shipping twice,” said Chang. “We can also customize products. Clients send us the specifications, and we do the modification to the products before we ship to any of the nationwide locations.”
To meet the expectations of the vendors and customers he works with, Chang expects hard work from his employees, and he works just as hard. The reason Directron.com is still standing when so many other resellers aren’t is partly because of this workhorse mentality, he said.
“We all know we’re here because of the customers,” said Chang. “Our ultimate goal is to help customers solve their problems, find the right products and solutions, recommend the products they need, and give them the best experience possible. With those conditions, we can do well as a company.”