Dixons, the electricals retailer, is hurting. Earlier this month, the owner of Currys, the Link and PC World, reported a 7% drop in same-store sales in the UK.
Chief executive John Clare blamed heightened competition from supermarkets and new direct retailers. Most people know about Tesco and Asda branching out into non-food merchandise, taking business away from a whole range of high street names ranging from Boots to Dixons.
The new direct retailers are lesser-known creatures. In the UK, the big online retailers of PCs, computer parts and an increasing array of consumer electronics such as DVD players and digital cameras are dabs.com and Ebuyer.
For small businesses, these online retailers are clearly the place to pick up computer at bargain prices, although service leaves something to be desired judging from the user reviews.
Still dabs.com and Ebuyer have clearly found a niche. In four years, Ebuyer, started in a garage by Paul Cusack, has grown to be one of the UK's biggest online retailers of technology. Since its launch in November 2000 with an investment of £250,000, Ebuyer has reached a turnover of over £220m.
These companies can sell products at astonishing speed compared to their bricks and mortars counterparts. Laptops do not sit around for weeks at they can do in high street shops, but are shifted in a number of days.
This cuts down on warehousing costs and speeds up cash flow. As a result, these etailers can offer their products at prices well below those on the high street, hence the squeals of pain from Dixons. The existence of sites such as Ciao and Kelkoo where you can make price comparisons also helps to drive traffic to the new etailers.
The problem for companies such as dabs.com and Ebuyer is that barriers to entry in the sector are low, so new rivals can appear at any time to take away business.
Bob Armao, the chief executive of Ebuyer, acknowledges this not inconsiderable wrinkle. But he says Ebuyer has the necessary capital to go the distance thanks to funds from a venture capitalist.
"There will be consolidation and there will six to eight players," Armao told Business Insight. "We believe we have the necessary scale in terms of buying power, inventory and capital to be part of that group."
