August 09, 2004

Multichannel

Best Buy Gives Customers What They Want

When told that one analyst recently dubbed his company the "poster boy" for effective multichannel selling, BestBuy.com Senior Vice President and General Manager John Thompson sounded genuinely taken aback. "Wow," he says. "Really, all we've been doing is giving our customers what they want."
Granted, with 611 stores and a brand solidified through years of slavish devotion to consumers, Best Buy boasts significantly more in the way of resources than most of its peers (the company generated $20.9 billion in sales in 2003). But, as other well-regarded bricks-and-mortar operations have learned (see under "Depot, Home"), in-store dominance does not guarantee multichannel success. And with its partnership with eBay finally made public, Best Buy seems primed to hold onto its leadership position in the space.

BestBuy.com was launched in 1999, offering little more than a store locator and basic company information. To hear Thompson tell it, the company quickly became aware that tech-savvy customers wanted more. "Selling on the site was a given. The challenge was doing it right, giving customers choices in terms of delivery and services that aren't always practiced in a big-box environment," he recalls.

Thompson freely admits that Best Buy experienced a few bumps on the way to effect a multichannel presence. The online world required a commitment to customer analytics that, despite the company's progressive approach to CRM, wasn't where it had to be. Too, there was concern about the flexibility of merchandising strategies. Separately, the company worried that fraud-wary customers would need significant assurance before committing to online purchasing.

"Most companies are very methodical about how technology is developed and deployed. But in this space, you have to find a different rhythm to test products and offers quickly," Thompson says. "It's a very responsive environment. You learn faster about your customers, and you have to apply that knowledge faster."

Best Buy soon overhauled its Web site and turned to the kiosks that had been deployed by other retailers with only sporadic success. The in-store kiosks, which allow consumers to order any item that Best Buy sells (with guaranteed fast delivery), addressed the potential disappointment of out-of-stock items. "After you look at an item in one of our stores, you can go home and talk to your partner about it before ordering online. Or you can get educated on something at home, and then go to the store and buy it," Thompson says. Indeed, recent research revealed that nearly half of the company's customers visited BestBuy.com before making an in-store purchase.

As for the partnership with eBay in March, Best Buy formally unveiled two outlets on the auction site. Through the arrangement, the company is hoping to increase sales margins on older and inventory items that previously had been handed over to liquidators. While analysts viewed the move as a response to increased sales of consumer-electronics products by mass merchants like Wal-Mart, Best Buy sees it as merely another option for consumers.

"Organizations that have catalogue or order businesses, like Staples, they just use the Internet to do what they'd always done," Thompson says. "For us, we started from scratch, so it's gratifying to be recognized for doing this well."

Best Buy Gives Customers What They Want

Posted by Craig at August 9, 2004 09:34 PM