Egghead Software

Egghead Software was a computer software retail company. It was founded by Victor Alhadeff in 1984, and grew into a chain with over 200 stores in the United States and a few in Canada. Its stores were primarily located adjacent to shopping malls. Egghead operated two distinct divisions - Retail Division and the Corporate, Government & Education (CGE) Division. Competition grew especially from big box retailers. Severe price pressures also grew in the CGE division. In May 1996 Egghead sold the CGE division to Software Spectrum of Dallas Texas. Reported proceeds of the sales vary from 45 million to 90 million and the associated revenue was documented at between 362 million to 440 million. Faced with declining revenues, in 1998, the company shifted its focus to online business, closing its retail locations and selling entirely through its Egghead.com website. Egghead.com merged with online auctioneer OnSale.com in 2000 and assumed the name Egghead.com.

Egghead was hurt by a December 2000 revelation that hackers had accessed its systems and potentially compromised customer credit card data. The company filed for bankruptcy in August 2001. After a deal to sell the company to Fry's Electronics for $10 million fell through, its assets were acquired by Amazon.com for $6.1 million.

Egghead was successful from the early days, expanding from a single store in Bellevue, Washington, to a 200-store chain, with locations primarily on the West Coast. A 1989 newspaper promotion in the Los Angeles area announcing the grand opening of the Pasadena, California, store offered a coupon offering customers a free 5¼" 360k floppy disk for showing up—at the time an unprecedented offer. Customers were lined up out the doors and down the block, an indication of the insatiable desire for software in the booming personal computer market.

Early on, the company focused on repeat business, customer service, and sales integrity. Egghead easily became the premier retail vendor of software and peripherals in the United States. The company sold more Microsoft product than any other U.S. vendor for a number of years and enjoyed distinctly favorable pricing as a result.

Among other things, Egghead's customers could sign up for a "CUE" card (for "Customer Updates and 'Eggs'tras") that would guarantee a slightly reduced price on certain items, while at the same time tracking user purchases.

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