VIZIO, founded in 2002 with only $600,000 in capital by entrepreneur William Wang to create high quality, flat panel televisions at affordable prices, has surpassed established industry giants Sony Corporation and Samsung Electronics Company to become the top flat-panel high definition television (HDTV) brand sold in North America. To get there, VIZIO developed a business model that effectively combines elements of aggregation and arbitrage strategies. VIZIO’s contract manufacturing model is based on aggressive procurement sourcing, supply-chain management, economies of scale in distribution.
While a typical flat-screen television includes thousands of parts, the bulk of the costs and ultimate performance are a function of two key components: the panel and the chipset. Together, these two main parts account for about 94% of the costs. VIZIO’s business model therefore focuses on optimizing the cost structure for these component parts. The vast majority of VIZIO’s panels and chipsets are supplied by a handful of partners. Amtran provides about 80% of VIZIO’s procurement and assembly work, with the remaining 20% performed by other ODMs, including Foxconn and TPV Technology.
One of the cornerstones of VIZIO’s strategy is the decision to sell through wholesale clubs and discount retailers. Initially, William Wang was able to leverage his relationships at Costco from his years of selling computer monitors. VIZIO’s early focus on wholesale stores also fit with the company’s value position and pricing strategy. By selling through wholesale clubs and discount stores, VIZIO was able to keeps its prices low. For VIZIO, there is a two-way benefit: the prices of its TVs are comparatively lower than those from major manufacturers at electronics stores, and major manufacturers cannot participate as fully as they would like to at places like Costco.
VIZIO has strong relationships with its retail partners and is honored to offer them only the most compelling and competitively priced consumer electronics products. VIZIO products are available at valued partners including Wal-Mart, Costco, Sam’s Club, BJ’s Wholesale Club, Sears, Dell, and Target stores nationwide along with authorized online partners. VIZIO has won numerous awards including a number-one ranking in the Inc.500 for “Top Companies in Computers and Electronics,” Good Housekeeping’s “Best Big-Screens,” CNET’s “Top 10 Holiday Gifts,” and PCWorld’s “Best Buy,” among others. 1
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