TigerDirect

TigerDirect
Type of site
 Subsidiary
Founded 1985 (1985) (as BLOC Development Corp.)
1987 (1987) (as TigerDirect)
Predecessor(s)
Headquarters El Segundo, California, United States
Area served United States and Canada
Founder(s)
  • Gilbert Fiorentino
  • Carl Fiorentino
  • Karlton Norman
  • Orlando Ramos
CEO Frank Khulusi
Industry Retail
Products Computer hardware, software, peripherals, gaming, electronics
Parent PCM, Inc.
Website
Alexa rank 1,119 (February 2014)[1]

TigerDirect is an El Segundo, California-based online retailer dealing in electronics, computers, and computer components that caters to business and corporate customers. Previously owned by Systemax, which is known for its acquisitions of the intellectual property of the defunct U.S. retail chains Circuit City and CompUSA, and relaunching them as online retailers. The two brands were subsequently shuttered and consolidated into the TigerDirect site. In 2015, TigerDirect phased out all of its remaining brick-and-mortar retail operations, and PCM Inc. acquired Systemax's online North American technology retail business.

Overview

TigerDirect in Canada

The bulk of the company's business was based on web and catalog computer electronics sales, where TigerDirect has carved out a niche by placing a heavy emphasis on rebate marketing as a way to offer lower prices. The company also operates retail store and business-to-business channels. The online company WorldwideRebates.com performs some of its rebate processing, and shares common ownership.[2]

History

The company was founded as BLOC Development Corp., a publisher of utility and application software products starting with FormTool, in 1985. The original company was a pioneer in utility software with several top 10 titles. The original founders were: Frank Millman, Jorge Torres, Tim McGuinness, Frank Haggar, Phil Bolin, Stephan Whitney, and Bob Horton. Frank Milman and Jorge Torres conceptualized the first product "FormTool", then the development team led by Tim McGuinness, Ph.D. developed the initial and several successful follow-on versions.

In 1989, Tiger Software became a subsidiary of publicly held Bloc Development Corporation. BLOC Development was also the parent company of BLOC Publishing (a sister company of TigerSoftware), which continued the development and publishing of the company's flagship product "FormTool", and 20 other products; and SoftSync, former publisher of the "EXPERT Software" titles and the Macintosh accounting software "Accountant Inc."). BLOC Development later changed its name to TigerDirect.

TigerDirect abandoned the profitable software development in favor of the TigerSoftware catalog by 1991. Unfortunately, the new model under the leadership of Gilbert Fiorentino was unprofitable, and the company was sold in distress to Global DirectMail (now known as Systemax). In 1994 TigerDirect launched a series of profitable smaller catalogs that included GraphicsExpress, as well as CDROM and MAC catalogs. In 1996, after an aborted attempt at acquisition by Hanover House, it was acquired by Systemax (NYSE: SYX)[3] The commercial website TigerDirect.com was launched in 1995 by Tim McGuinness, Ph.D. (one of the original Bloc Development Founders), selling computer and electronics, books and software. In 2000, the firm expanded its product offerings to include "refurbished" and "recertified" products, brand-name computers from IBM, HP, eMachines, Gateway and others.

Acquisition of CompUSA and Circuit City brands

On January 6, 2008, Systemax announced the acquisition of the CompUSA brand, trademarks and e-commerce business, and as many as 16 CompUSA retail outlets in Illinois, Florida, Texas and Puerto Rico.[4] On May 13, 2009, Systemax similarly acquired Circuit City's intellectual property, including its trademarks, brand name, and domain names.[5] The deal took effect six days later for a price of 14 million dollars. The defunct CircuitCity.com website was restored after the Systemax purchase. In late-December 2012, both brands were shuttered and consolidated into TigerDirect.com.[6]

Retail closing, sale to PCM

On March 10, 2015, TigerDirect announced that it would close all but three of its retail stores in an effort to focus exclusively on online and business-to-business sales. Canadian operations consisted of 6 stores in Southern Ontario and all closed in 2015 (and replaced by the online distribution centre in Richmond Hill under Acrodex or PCM Canada)[7] The locations left open were located in Jefferson, Georgia, Guaynabo, Puerto Rico, and its then-headquarters location at Miami, Florida. The company also closed a distribution center in Naperville Illinois. .[8]

In November 2015, PCM Inc. acquired Systemax's "North American Technology Group", including TigerDirect, for $14 million. The division had, by late-2015, incurred operating losses of $68 million (in contrast to its other businesses, which had an operating profit). The acquisition was closed on December 1, 2015 with the sale of its business-to-business customer list and intellectual property. The transfer of Systemax's web assets is to occur by February 15, 2016. The company also announced the shutdown of its remaining distribution center and retail stores.[9][10]

In late-December 2015, the site began holding a clearout sale with no returns accepted; a company spokesperson stated that the site was liquidating its current stock in preparation for its formal transfer to PCM.[11][12]

Website Re-Launch

TigerDirect re-launched its electronics e-commerce website on February 15, 2016 under PCM Inc. ownership. The new TigerDirect.com is a technology superstore offering a wide variety of technology products at competitive pricing. Tiger Direct currently maintains a substantial B2B customer base and has restructured its marketing engine to serve new customers under the parent company of PCM. PCM also operates TigerDirect.ca for their Canadian operations.

Controversies

Federal Trade Commission ruling

On November 4, 1999, case C3903, the Federal Trade Commission issued a decision and order against TigerDirect for violations of the Pre-sale Availability Rule, the Disclosure Rule and the Warranty Act.[13] Without admitting any wrongdoing, TigerDirect agreed to "not represent that it provides On-Site Service unless all limitations and conditions that apply are disclosed", "fulfill obligations under the warranty within a reasonable period of time after receiving notice from the consumer", and "cease and desist from failing to make warranty text available for examination prior to sale, failing to disclose what is not covered under any given warranty or the procedures needed to have warranty work accomplished and failing to disclose that certain states may give the consumer legal rights in addition to those provided by the warranty."[13]

Apple Computer lawsuit

In early 2005, the company filed a lawsuit against Apple Computer Inc. (now Apple Inc.), alleging trademark infringement, dilution and false designation of origin with Apple's introduction of Mac OS X v10.4, marketed with its codename "Tiger". Although TigerDirect had registered several tiger-related names with the United States Patent and Trademark Office, Apple received trademark approval for version 10.4 (Tiger) of its OS X operating system in 2003. TigerDirect registered opposition against Apple's filing with the Trademark Trial and Appeal Board, and on May 13, 2005, Apple won an emergency hearing. The judge ruled in favor of Apple, considering the marks to be distinct.[14]

Infoworld report

Infoworld's Robert X. Cringely reported in 2006 that "Tiger's sister company OnRebate.com, which handles payouts for the discount dealer, appears to specialize in the 'insufficient documentation' gambit,"[15][16] Consumer-reported difficulties obtaining the rebates led to an investigation by the Florida Attorney General[17][18] and a failure to maintain a satisfactory BBB rating.[19] According to a former controller at TigerDirect, improperly unpaid rebates were intentional: "...the concept was that if the customer complains, you send them out the check to make them happy. But if they don't complain, they totally forget about it. That is the concept of these rebates. People forget that they sent them out."[20]

Dell lawsuit

On April 17, 2009, Dell, Inc. filed a lawsuit against TigerDirect.[21][22] Dell alleged that TigerDirect, a former authorized reseller of Dell products, sold discontinued and outdated Dell products as new and under a Dell warranty. Dell also alleged that the products were from a third-party and advertised with an unauthorized, modified version of the Dell logo. Dell became aware of this when TigerDirect customers contacted Dell to demand price matches.[21]

State of Florida lawsuit

On September 4, 2009, Florida Attorney General Bill McCollum filed suit against TigerDirect, OnRebate, and their parent company Systemax, charging the companies with failing to provide rebates to customers.[20] Systemax responded that a separate class action lawsuit making similar allegations had been filed in federal court in 2007 and was dismissed on August 31, 2009. The company denied the allegations in the Florida Attorney General complaint; the suit was eventually settled for $300,000.[23]

CBC investigation

In the 42nd season of Marketplace, a Canadian consumer advocacy newsmagazine show on CBC Television, TigerDirect was featured in the episode "Online reviews: When companies edit your review". The show featured a consumer who had purchased several computers from the retailer and subsequently gave a poor review for service. The review was edited by TigerDirect prior to the review being placed on the firm's website.[24] The consumer contacted TigerDirect several times to have the edited review removed but failed until Marketplace contacted TigerDirect, on his behalf.[25]

Founders convicted of fraud

In 2014, brothers Carl and Gilbert Fiorentino were arrested and charged in federal court with scheming to obtain $9 million in kickbacks and other benefits and to hide their ill-gotten gains from the Internal Revenue Service while working as senior executives at Systemax Inc. and its TigerDirect Inc. unit. The government alleged the brothers schemed to obtain kickbacks for steering company business to certain contractors between 2002 and 2011. In one case, the brothers received more than $9 million in cash and other payments for steering more than $230 million in business to an Asian supplier of computer parts and accessories.[26] In 2015 Gilbert Fiorentino pleaded guilty to a conspiracy charge, while Carl Fiorentino pleaded guilty to both fraud conspiracy and tax evasion. Carl Fiorentino had faced significantly more time than Gilbert Fiorentino, but U.S. District Judge Jose E. Martinez decided to sentence them to similar prison terms. Gilbert received 5 years in prison while Carl, received 6-1/2 years.[27] In March of 2016, the Fiorentino brothers were ordered to pay a total of $35 million in restitution to Systemax.[28]

References

  1. ↑ "Tigerdirect.com Site Info". Alexa Internet. Retrieved 12 February 2014.
  2. ↑ "Systemax Q4 2007 Earnings Call Transcript – Seeking Alpha". Seekingalpha.com. 2008-03-10. Retrieved 2014-01-27.
  3. ↑ "Systemax.com". Systemax.com. Retrieved 2014-01-27.
  4. ↑ "Systemax Announces Definitive Agreement to Acquire Selected Assets and Retail Stores From CompUSA". RedOrbit.com. Retrieved 2008-01-06.
  5. ↑ "Firm buys defunct Circuit City’s brand, domain names". Syx.client.shareholder.com. 2009-04-13. Retrieved 2014-01-27.
  6. ↑ "Systemax To Cut Circuit City, CompUSA Brands, Exit PC Manufacturing". Twice.com. 2012-11-02. Retrieved 2014-01-27.
  7. ↑ https://www.wifihifi.ca/LatestNewsHeadlines/TigerDirecttoCloseAllButThreeStores,FocusonB2BSales.html
  8. ↑ http://www.marketwatch.com/story/systemax-reports-fourth-quarter-and-full-year-2014-financial-results-2015-03-10?reflink=MW_news_stmp
  9. ↑ "Blockbuster Deal: PCM Buys North America Systemax B2B Business, TigerDirect Brand". CRN. Retrieved 29 December 2015.
  10. ↑ "Systemax To Lay Off 500 As It Shuts North American Technology Business". CRN. Retrieved 29 December 2015.
  11. ↑ "TigerDirect Has New Owner, Changes Return Policy On Christmas". The Consumerist. Retrieved 29 December 2015.
  12. ↑ "TigerDirect Clearing Out Inventory with Sitewide Sale, Future Uncertain". MaximumPC. Retrieved 3 February 2016.
  13. 1 2 Case C3903 at FTC website
  14. ↑ Court sides with Apple over "Tiger" trademark dispute, AppleInsider, 13 May 2005.
  15. ↑ Cringely, Robert X. (December 29, 2006). "Microsoft tech support swoons, Google promises the moon: When 21st century software meets 12th century bureaucracy". InfoWorld. InfoWorld Media Group, Inc. Retrieved November 28, 2009.
  16. ↑ Cringely, Robert X. (December 1, 2006). "Microsoft and Novell go kablooey, Second Life gets gooey: Sometimes even $440 million can't buy you happiness". InfoWorld. InfoWorld Media Group, Inc. Retrieved November 28, 2009.
  17. ↑ Tuesday, January 29, 2008 - by Chad Weirick (2008-01-29). "Florida Attorney General To Investigate TigerDirect". Hothardware.com. Retrieved 2014-01-27.
  18. ↑ Albright, Mark. "TigerDirect Snags Three CompUSA Outlets", St. Petersburg Times, 12 February 2008.
  19. ↑ "TigerDirect BBB Report". Retrieved 20 December 2006.
  20. 1 2 "State sues TigerDirect, OnRebate". Bizjournals.com. 2009-09-04. Retrieved 2014-01-27.
  21. 1 2 Dell, Inc. v. TigerDirect, Inc., Case No. 09-CV-3879, S.D.N.Y., 17 April 2009.
  22. ↑ Joseph F. Kovar. "Dell Sues Tiger Direct, Alleges Old Computers Sold As New". CRN. Retrieved 12 February 2014.
  23. ↑ "Attorney General Reaches Settlement With Systemax". Office of the Attorney General of Florida. Retrieved 2011-06-15.
  24. ↑ "Jeff’s reviews before and after, and TigerDirect’s response". CBC. Retrieved 2014-12-24.
  25. ↑ "Online reviews: When companies edit your review". CBC. Retrieved 2014-12-24.
  26. ↑ http://www.miamiherald.com/news/business/article4037822.html
  27. ↑ http://www.foxbusiness.com/markets/2015/03/03/brothers-guilty-fraud-at-systemax-computer-company-sent-to-federal-prison-by.html
  28. ↑ http://www.theregister.co.uk/2016/03/02/systemsax_restitution/
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