You won't see a store on every street corner, but PC Connection is just a click away. A leading direct marketer of computer products in the US, the company sells hardware, software, networking devices, and peripherals. It offers more than 300,000 items from manufacturers such as Apple, Hewlett-Packard, and Microsoft. PC Connection also provides a range of IT services. Through its catalogs, websites, and direct sales force, PC Connection targets small and midsized businesses, large corporations, government agencies, and educational institutions, as well as individual consumers. PC Connection was founded in 1982 by chairman Patricia Gallup and director David Hall.
PC Connection operates through eight locations in addition to its 283,000-square-foot distribution and fulfillment complex in Wilmington, Ohio, and distribution centers in Kenne, Merrimack, and Portsmouth, New Hampshire; Marlborough, Massachusetts; Rockville, Maryland; Dakota Dunes, South Dakota; Boca Raton, Florida; and Itasca, Illinois.
The company conducts its business operations through three business segments: SMB, Large Account, and Public Sector.
PC Connection owns four sales companies, each of which has the ability to deliver custom-configured computer systems overnight. Small and midsized businesses (SMB) are PC Connection's largest customer segment, typically accounting for more than 40% of sales. SMB customers are served by the company's PC Connection Sales subsidiary. Large corporate accounts, handled by PC Connection's MoreDirect subsidiary, generate about 37% of revenues. Public sector customers (including government agencies and educational institutions) contribute 22% of sales and are served by PC Connection's GovConnection subsidiary.
Sales and Marketing
PC Connection connects with customers through direct marketing channels, including telemarketing and field sales, Internet sales through its four e-commerce sites, and inbound telesales. The online retailer reported advertising expenses of $16 million in 2015.
Five vendors constituted 61% of the company's total product purchases in 2015, including Ingram, 21%; Synnex, 15%; and Tech Data, 8%.
PC Connection's sales increased for the sixth consecutive year in 2015. In fiscal 2015, net revenues was $2.57 billion, increased by 4% due to an increase in Large Account segment as the result of its focus on growing advanced solution sales including software and servers/storage products. Software and servers/storage product sales increased due to investment in technical solution engineers and the completion of large software deals. Servers sales increased in part due to the expiration in July 2015 of support for Windows Server 2003 software.
Revenues from the SMB segment increased slightly due to higher notebooks/mobility sales. (Sales of desktops were high due in 2014 due to the expiration of support for Windows XP software. Increased sales of notebooks/mobility, servers/storage, and net/com products in 2015 offset the year-over-year decline in desktops).
Public Sector segment sales decreased due to higher sales made under federal government contracts being more than offset by state and local government and educational institutions purchasing less for K-12 end users. Sales of notebooks/mobility increased in this segment, offset by decreased sales of net/com products.
PC Connection has recorded an increasing trend in net revenues over the last five years.
In fiscal 2015 net income increased by 10% due to higher net revenues.
Cash from operating activities decreased by 13% due to the changes in accounts receivable primarily due to the timing of sales and increase in inventories.
PC Connection is focused on maintaining strong customer relations by providing good service. About 90% of sales are made to repeat customers each year. The company acquires products for resale both directly from manufacturers and increasingly indirectly through distributors and other sources.
Looking beyond hardware and software sales, PC Connection is emphasizing service offerings that are geared to business customers. Its ProConnection services division helps companies with IT lifecycle management, software services, and optimizing servers, storage, and networks. The company is even offering services for companies moving their computing resources to the cloud.
Through increased targeted marketing, the company seeks to expand the number of active customers and generate additional sales to existing customers by providing more value-added services and solutions. It has developed specialty catalogs featuring product offerings designed to address the needs of specific customer populations, including new product inserts targeted to purchasers of graphics, server, and networking products. It also uses Internet marketing campaigns that focus on select markets, such as healthcare, and plans to expand its cloud-based solution.
In an effort to address increasing international demands, PC Connections has an alliance with Bechtle AG, a European IT service provider.