Newegg has been one of the giants in online retail for computer parts and peripherals for some time, but browsing through their online marketplace may have you raising questions about this successful business. So why is Newegg so cheap?
Newegg is cheap due to taking advantage of their size, running a volume strategy, a solid reputation, massive efficient warehouses, lack of brick and mortar retail footprint and effective management.
Let’s look at why Newegg is so cheap, what their secrets to success are, how they did it and whether you can trust you’re getting the real deal for prices so cheap.
Why Are Newegg Prices Cheaper than Official?
Newegg has several factors that work in its favor to get the lowest prices, including market share, volume, economies of scale, advertising and brand recognition.
Newegg has been in the business a long time, and can thus make accurate predictions about its sales and associated stock levels. This means they can make a lot of safe gambles on what products to have, and what not to have.
Being a successful company by volume selling is critical in almost any retail business. Volume selling is the idea that you sell products at close to their cost, with razor thin profit margins. But as you sell more and more products, you still make money on it.
This strategy can be hard to pull off, and is often contingent on lowering what is known as COGS, or cost of goods sold. It means having a very efficient business that minimizes waste, keeps storage costs low and generally is nimble and agile.
Economies of scale is a specific phrase meaning that a business is successfully able to increase production while keeping costs low or even reducing them, sometimes referred to as the marginal cost of a product. [1]
Newegg has achieved economies of scale due to their successful business operations allowing them to grow and sell more products, thus leading to more sales as they become better at what they do.
Newegg also offers the ability for manufacturers of products to advertise with them, either running explicit advertising for their products, or boosting their products in search results within the Newegg catalog.
The massive email list that Newegg holds is also gold for advertising, as so many consumers will scour the email from top to bottom to find deals, meaning you get so many eyeballs on your advertised products.
Finally, brand recognition is one of the most important factors in all of this.
If people associate your brand with good deals and having the latest products as well as having what you want, then it’s going to be your first destination and you won’t bother searching elsewhere.
Newegg has been around since 2001, and constantly trying to have the latest gadgets on their online marketplace. Their success in this region acts as a sort of positive feedback loop, causing more sales and thus enabling them to have the capital to get the latest goods.
Newegg is also an online retailer, meaning they don’t need to have an expensive footprint of retail stores and can focus on making their warehouses the best they can be, thus leaning into their core competencies.
Specializing in technology and computer parts has its advantages, as Newegg strives to build relationships with these types of manufacturers exclusively.
This means they concentrate on a smaller amount of products, meaning they don’t deal with products such as homewares, food, and other products such as Amazon. This specialization is key to getting the best deals and sourcing those hard to get products.
Newegg has shown themselves to be masters in this arena, and this consistency enables consumers to also depend on them and go to Newegg first when looking for that rare or new computer part.
Are Newegg Products Authentic?
Newegg is a publicly listed company based in California, United States of America. They are subject to local and international commerce laws, and so you can rest assured that they are selling authentic, legitimate products.
Newegg isn’t manufacturing the products themselves, they are a retailer that buys in bulk and thus gets a discount on such purchases, which they then store in a warehouse and ship to the individual customer as quickly as possible after the order is made.
They make their money by handling the logistics of shipping products to you that a wholesaler doesn’t, or cannot, deal with.
As other retailers like Amazon, eBay and Best Buy have upped their game, this market has become even more competitive but Newegg is still one of the top performers, selling authentic, genuine products.
Newegg also offers a great PC building tool on their website. [2] This allows you to pick from prebuilt systems or construct your own, with the individual components also being suggested based on compatibility and availability.
This tool is also great as it features many useful filters for every single possible configuration you could think of, even factoring in options like current promotions and bundles.
This PC building tool is just one of the features offered by Newegg that shows they are focused on making the PC or technology purchase decision as informative, easy and straightforward as possible.
Where Is Newegg Shipping From?
Newegg has several warehouses that they use for orders, with the main ones being in California, Tennessee and New Jersey in the United States. Newegg picks the closest warehouse to your shipping location.
If you’re getting something shipped overseas, it still first gets organized in the United States before being forwarded on to the international location. [3]
Newegg has a very close relationship with FedEx, enabling customers to go pick up their orders from the nearest FedEx branch. [4] This is crucial, as expensive computer parts can be very hard to come by as it is, and the last thing you want is them getting lost or stolen.
A pickup location means your goods are securely stored and convenient to get, as research has shown that most customers in the United States live less than five miles from the nearest distribution center or pickup location.
Is Newegg Legit?
Newegg is a legitimate company that has been in business for over two decades, with public scandals being few and far between.
Like any big retailer, they are going to drop the ball sometimes, and you should always be careful about reading reviews online. Most people are only going to leave a review if they had a negative experience.
Newegg processes upwards of 50,000 orders a day and there are going to be cases where products are faulty, have been opened or refunds are hard to get. While Newegg has been burned by such cases in the past, they have owned up to them and endeavored to do better.
Newegg realized that a core part of their business is being able to reliably ship their products quickly, and has been working on this problem for some time, even before online shopping became as big a deal as it is now.
This was achieved via internal systems rework that focused on efficient pick-packing of the order, tracking numbers and also close collaboration with delivery and forwarding partners to ensure that products are getting to where they need to go as quickly as possible.
Is Newegg Trustworthy?
Newegg, like all businesses, lives and dies by its reputation. This is perhaps all the greater when you consider the online nature of Newegg: it isn’t that hard to leave a scathing review and broadcast it to hundreds of thousands if not millions if Newegg has done terribly. [5]
However, Newegg wouldn’t be around in such a cutthroat and competitive market sector if they weren’t able to deliver value to customers consistently over all these years. It’s not enough to just put crappy, cheap products out there, especially in consumer electronics.
Newegg consistently gets to the top or near the top of customer satisfaction surveys, customer ratings, best online shopping and many other lists. [6] [7]
