Newegg

Early years and growth

The company was founded by Fred Chang, a U.S. immigrant from Taiwan, in 2001.[2] "Newegg" was selected as the company name to signify new hope for e-commerce during a period when e-commerce businesses were struggling to survive.[3][4]

Between 2001 and 2004 Newegg grew fast and was already profitable.[5]

In 2004, Newegg established Rosewill[6] as a private-label reseller of computing and household products from many manufacturers.

In 2005, Newegg.com was named one of the Internet's Top 10 retailers by Internet Retailer Magazine, with a 2004 sales revenue of just under $1 billion. Newegg.com grew an additional 30% in 2005, bringing annual sales to approximately $1.3 billion. Newegg launched NeweggMall.com in July 2008, Newegg.ca in October 2008, and NeweggBusiness.com in August 2009. In 2009, it was listed as on Forbes America's Largest Private Companies list.[7]

Chang had been Newegg's chairman and CEO until August 1, 2008, when it was announced he would step down as CEO and chairman while remaining a member of the board of directors and executive committee.[8][9] He was succeeded by Tally Liu.[10] Chang also retained his position as president of Newegg's Chinese operations.[8][9][11]

Attempted 2009 IPO and Newegg Marketplace

On September 28, 2009, Newegg Inc filed for an IPO (initial public offering) with the U.S. Securities and Exchange Commission. The filing stated that Newegg has been profitable every year since 2001 and generated sales of $2.1 billion in 2008. The company's largest outside shareholder is New York-based venture-capital firm Insight Venture Partners. The IPO was managed by JP Morgan, Bank of America, Merrill Lynch, and Citi.[12] In 2011, the company withdrew its registration for filing for an IPO, saying it would continue to explore alternative options for funding.[13]

It launched Newegg Marketplace[14] in 2010 and exceeded $2.5 billion in revenue that year. The company has more than 1,500 employees.

In 2010, Liu departed, and Chang became CEO again.[10]

Subsequent expansion

On June 15, 2017, during London Tech Week, Newegg announced a global expansion plan[15] to serve key parts of Asia Pacific, Europe, Latin America, and the Middle East. Once complete, the online retailer is expected to reach customers in a total of 50 countries.[16] On November 2, 2017, the company announced key global milestones, including localized payment options, enhanced customer service, and a greater product selection for its international customers.[17]

Liaison Interactive buyout and SPAC merger

In 2016, Hangzhou Liaison Interactive Information Technology Co. (szse: 002280), a Chinese technology company, acquired a majority stake in Newegg in an investment deal.[18] In 2020, Newegg entered into a merger agreement with Beijing, China based Lianlou Smart Limited (NASDAQ: LLIT), a Chinese special-purpose acquisition company, wherein Newegg stockholders became majority owners of LLIT. Following the consummation of the merger, Newegg was listed as a publicly traded company on Nasdaq (NASDAQ: NEGG) in May 2021 as Newegg Commerce, Inc.[19]

Controversies

In March 2010, Newegg sold 300 counterfeit Intel Core i7-920 CPUs.[43] The problem was first exposed by a member of the website HardOCP who posted on the site's forum about receiving the fake CPU.[44] Newegg at first released a statement saying that the processors were "demo units", but later said that they discovered that the processors were actually counterfeit and that the company was terminating its relationship with one supplier in response.[45] The company offered replacement units to the customers who received counterfeit processors, while Intel stated that they had been made aware of the problem and were investigating as well.[46]

In early 2018, customers in the state of Connecticut were notified that Newegg had not collected state sales tax due on out-of-state purchases in the past three years. Newegg was given a choice of collecting such tax in the future or turning over customer information to the state's Department of Revenue Services, which would require customers to file a sales tax form for the past three years of purchases. Newegg chose to furnish the customer information;[47] as Newegg did not have a physical presence in Connecticut, Newegg believed it did not need to collect state sales tax from the ruling in Quill Corp. v. North Dakota. Connecticut's Department of Revenue Services later issued tax bills to these customers.[48]

In September 2018, Newegg announced that malicious code had been placed on their servers for over a month, allowing hackers to access customers' credit card information upon checkout.[49]

2022 Gamers Nexus RMA and open-box controversy

In February 2022, the YouTube channel Gamers Nexus published a video titled "Newegg Scammed Us," detailing its experience with Newegg's returns and open-box practices. The channel’s editor-in-chief, Steve Burke, purchased a motherboard from Newegg and later returned it unopened, as he no longer required it. Newegg refused the refund, claiming that the motherboard had been damaged by the customer. After the case became public, the board was returned to Burke and the refund issued. Upon inspection, the motherboard bore a manufacturer RMA sticker from Gigabyte, and according to a Gigabyte representative, the company had quoted Newegg a repair cost of US $100, which Newegg declined to pay before reselling the known defective board as working open-box.[50][51]

Following publication, other reviewers and customers reported similar experiences in which Newegg allegedly refused to process returns or refunds on multiple occasions, often citing damage to items that had been returned in unopened or unused condition.[51]

In response, Newegg issued a public apology, attributing the issue to "unintentional process errors and isolated incidents." The company announced a new "no-questions-asked" return policy for open-box CPUs and motherboards, which was later expanded to include other open-box product categories.[52]

Patent troll cases

Newegg has become known as a company that fights "patent trolls".[61]

In January 2013, Newegg won a victory over Soverain Software when the Court of Appeals for the Federal Circuit overturned the district court ruling in favor of Soverain and invalidated a shopping cart patent by citing prior art from 1984, CompuServe’s Electronic Mall.[62][63] On January 13th, 2014, the Supreme Court refused Soverain Software's petition for a writ of certiorari to rehear a January 2013 decision of the Court of Appeals, effectively ending Soverain's case.[64]

In November 2013, Newegg lost a case in Texas against TQP Development over Newegg's use of https:// protocol mixing SSL and RC4. Whitfield Diffie and Ron Rivest, the inventors of public-key cryptography and RC4 encryption respectively, testified for Newegg.[65]

On July 6, 2015, after 20 months of waiting, Newegg filed an extraordinary petition urging US District Judge Rodney Gilstrap to issue judgment so that they would be able to file an appeal.[66] On July 15, 2015, Gilstrap ruled that Newegg did not infringe on a patent belonging to TQP Development.[67]