While online sales have been growing at a rate three times faster than brick-and-mortar stores for years -- and 21 percent of all electronics sales occur online -- Best Buy’s e-commerce sales numbers have been lackluster, to say the least, including the fact that Amazon.com has been selling three times the quantity of electronics online as Best Buy. Figures showed that of those who visited BestBuy.com, just over one percent, made a purchase, which is about half the average rate among retailers.
So Best Buy is now in the process of effecting a turnaround from an outdated business plan and a rusty website that were keeping it from competing seriously in online retail -- its main goals now to improving the customer experience, price analytics, and using stores as online fulfillment centers.
This is another chapter in my quest to see what retailers (like Best Buy, Staples, Office Depot, Walgreens and JCPenney) are doing to meet eCommerce online retail competition in an already dominated market.
Some of the business and economic challenges Best Buy is meeting include:
-- The online store of Best Buy provided minimal details on items for sale, along with fewer, and less informative customer reviews than its rivals.
-- BestBuy.com couldn't customize merchandise recommendations for unique customers.
-- Product searches sometimes brought shoppers to products they did not search for.
-- Best Buy operated 2,000+ stores under several different brands in many different locations, creating overhead that online-only retail rivals simply don’t have.
Here's what Best Buy is doing to improve its attraction to customers with the goal of doubling sales:
1. Focusing a new rewards program on the individual shopper -- enhancing the shopping experience and building loyalty.
2. Working to counter the problem of online information not keeping up with real inventory in a store.
3. Setting up in-store fulfillment centers.
4. Having in-store pick-up from Best Buy’s web store (a convenience used in about 40% of the company’s online purchases).
5. Selling returned products online (which the company used to liquidate at big loss).
6. Creation of in-store boutiques. Best Buy has installed Samsung "experience" stores through most of its locations, and is now working to establish Microsoft and Apple experience stores under the same roof.
7. Price matching. Best Buy instituted a program to match the prices of 19 online competitors, as well as local stores; plus rebates if Best Buy lowers its price on an item within 15 days of purchase.
8. Dedicating more space to growing and profitable categories like mobile, tablets and small appliances
9. Creating new clearance areas.
Bottom Line For Your Bottom Line:
Best Buy's efforts to improve its eCommerce competitiveness are already paying off as online traffic rose nearly 10 percent in August 2013, versus August of 2012. “After struggling with no real Internet expertise, they’ve brought on a pretty strong team,” said one analyst. Best Buy will need to continue mimicking the best practices of successful retailers in its climb back into relevance, said another article. Still others think the company can grab hold of the e-commerce market by reestablishing its name as the largest consumer-electronics retailer. "Making Best Buy a viable competitor of online counterparts… is going to be a two or three year journey,” said Best Buy CEO Hubert Joly.
Can planned e-commerce upgrades save Best Buy? (Retail Solutions Online)
Best Buy's Sales Surge After E-Commerce Update (Retail Solutions Online)