TigerDirect Becomes the Latest Retail Giant to Pounce on Bitcoin
Another major online retailer has announced that it is now accepting bitcoin. This time it's TigerDirect.
The company revealed the news on Thursday to much fanfare on its site, with an educational guide to bitcoin and incentives for GPU card shoppers to "Start Mining with AMD". TigerDirect will use BitPay as its payment processor, becoming that company's largest client to date. Bitcoin will be accepted only for online purchases, not in physical stores.
TigerDirect's parent company, Systemax Inc. (which includes Canadian subsidiary TigerDirect.ca) is a Fortune 100 company with annual revenues of over $2bn and more than 3,000 employees.
“TigerDirect has always been on the forefront of alternative online payment methods and delivering the most convenient ways for our customers to shop,” said Steven Leeds, TigerDirect's Director of Corporate Marketing.
“With individuals building their own high-powered PCs with parts offered on our site to mine bitcoins, it’s a logical fit.”
Paige Freeman, BitPay's VP of Sales, added: "We couldn't be more pleased to partner with such a forward thinking, customer-focused company as TigerDirect. Now that they are accepting bitcoin, there will be many others to follow in their footsteps."
TigerDirect, like fellow electronics retailer Newegg, has been teasing bitcoin plans for a few months now. The time for teasing is over now, though – Overstock.com began taking bitcoin at the start of the year, a good six months ahead of schedule, surprising many who thought its CEO was merely thinking aloud. Payment processor Coinbase jumped on the case as soon as it heard the speculation, and worked without break to develop an implementation.
Online electronics retail in the US is reported to be worth $43.8bn a year. With TigerDirect now officially in the bitcoin camp, there will be greater pressure on Newegg to announce something more definite soon.
Bitcoinstore, a smaller retailer which launched last February as a direct bitcoin-only challenger to the big online electronics retailers, tried to tip TigerDirect's hand when it posted a tweet on 30th November with a screenshot of its recent orders:
— Bitcoinstore (@Bitcoinstore) November 29, 2013
TigerDirect replied the same day:
— TigerDirect (@TigerDirect) November 29, 2013
It was duly retweeted nearly 800 times.
On Christmas Day, a company representative replied to a user's bitcoin request on Facebook with another hint of something to come.
Here come the retailers
Until Overstock.com took the plunge, bitcoin had attracted far more attention from financial world entrepreneurs than Big Retail. Many had been curious, but seemed to be waiting for better payment (and legal) structures to exist before taking action. Eyes were mainly on technology and computer hardware specialist retailers, whose customers were considered more likely to be bitcoin users.
Shopify announced it would introduce bitcoin payment options for its independent merchants in November. Overstock.com is an online retailer, but it deals mainly in household goods, so it was surprising to people unfamiliar with its CEO Patrick Byrne's anti-government currency beliefs when it announced a plan to accept bitcoin. Byrne named interchange and credit card fees as the chief reason for the business move.
MarketLine research indicates online retail in the US alone was worth $200.4bn in revenues in 2012. The electronics segment is the most lucrative of all, its customers supplying 21.9% (or $43.8bn) of that total. Having experienced a compound annual growth rate (CAGR) of 11% between 2008 and 2012 despite the economic hard times, online retail as an industry is projected to grow to $371.4bn by 2017.
Other online retailers are no doubt salivating at the thought of keeping more of that revenue in their own accounts, rather than handing it over to banks and credit card companies. They will also be watching closely to see how companies like Overstock.com and TigerDirect handle new consumer issues related to bitcoin, such as how to properly identify and resolve fraudulent purchases, and how such things can be proven.
It will also be a test for payment processors BitPay and Coinbase to address bitcoin's price volatility issues for retailers. But, these new companies coming online are in a new league, with annual revenues on a much larger scale.
The IRS will definitely be looking for its share, though it shouldn't be a problem with bitcoin income being converted instantly to dollars. Some in government, however, still bristle at the idea of large-scale adoption of a currency not under state control. There's no guarantee future retail adopters of different sizes will use one of the large processors, or bother to convert at all.
TigerDirect, headquartered in Miami, Florida, sells electronics online and through its retail outlets and B2B offices. It grew from a software retailer in 1989, absorbing both Circuit City and CompUSA along the way. Parent company Systemax Inc. controls a system of branded e-commerce websites, retail stores, relationship marketers and direct mail catalogs in North America and Europe. As well as TigerDirect, its brands include MISCO, WStore and Global Industrial.
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
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