Best Buy’s Final Frontier?
Several months ago there was a piece in this space called Best Buy Shrinks as the retailer announced its plan to shrink its typical store footprint by ten and later by twenty percent. While several reasons were attributed to the company’s change in in-store direction, including reduced real estate costs and expected income from other retailers through subletting vacated space in existing Best Buys, the main focus of the announcement dealt with the company’s desire to concentrate on building its Internet presence. My surprise at the time was that a store’s footprint should impede natural web-based growth. At this stage of the Internet’s presence in our everyday lives I would have expected all well financed companies to be running an optimum online operation.
Though a relatively recent invention in the annals of the history of mankind, the importance of the Internet in commerce has been well established. That a number of independent single unit and small regional retailers have managed to thrive in direct competition with Best Buy is all that is needed to prove the case. That Amazon’s recent issuance of glowing year-end financials was hardly a surprise, is all one needs to know about the importance of building a strong web presence.
Since the beginning of this year I have issued two Insights exploring aspects of Best Buy’s recent episodes of frustrating its customers. First, in what I termed the company’s Fright Before Christmas, I reviewed the to-the-last-minute, prior-to-Christmas delay of announcing the company’s inability in fulfilling online orders made in November and December, beginning with orders placed as far back as Black Friday. This surly reflected horribly on the company’s abilities with its website.
Perhaps more troubling, the extremely late notice seemed almost a cover up of embarrassment and brought into question the retailer’s sense of customer compassion as early shoppers were notified just days before Christmas that precious gifts would never arrive and left in a lurch. Then in a follow-up Insight which termed BestBuy’s Fight After Christmas, I reflected on its clumsy handling of in-store offerings.
As the company had indicated a shrinking of its in-store presence, I wondered how well it is adapting to serving customers online in everyday, non-crunch time practices. As much (though certainly not all) of the Best Buy’s Fight After Christmas piece reflected on in-store clumsiness when it came to price matching, I decided to see how their website does on simple pricing when it comes to competitors. Actually my test here wasn’t intended as a test until I received an innocent email from Amazon.
The email advertised new DVD releases. One of the offerings was for a TV show of the past. This evoked thoughts of another show and so I clicked on and was surprised at the low $14.99 price per season of a decades old crime show. I was tempted. To be sure I was getting a fair deal I logged onto bestbuy.com and was stunned to find that for the exact same DVDs, BB was asking $34.99 each.
Mobil price comparing is somewhat of a recent innovation, though now well worn for those with smart phones. Before the iPhone, I occasionally would dial a very knowledgeable friend when I came across a tempting deal on a pricey piece of equipment while visiting a brick and mortar. He would do my online comparison. But as true in-store, immediate price comparisons are a somewhat recent creation, comparing prices online goes as far back as online retailing. It is easy, quick and natural.
That Best Buy has the audacity to offer a DVD compilation for a more than double that of a prime competitor is foolishness. As it turns out I bought two seasons of that DVD series from Amazon and thinking of attractive gifts, added three long desired Rock based DVDs. The lone of these three which Best Buy offered was several dollars more than what Amazon was asking, BB didn’t offer the other two (of a very popular group) at all.
The five DVD sets I ordered came to just over $58.00. The three that Bestbuy.com did have would have cost pennies less than ninety five dollars. Of course anything much over Amazon’s offered prices would have prohibited this impulse order. Then again I was able to take advantage of Amazon’s free shipping which all my DVDs qualified for on orders totaling at least twenty five dollars. With Amazon there was no tax, which I actually don’t mind paying. And I received my parcel at my convenience through the US Postal Service. I didn’t have to drive out of my way to a store to receive free shipping as with Best Buy.
As if all this is not enough, the day after I received my order, another email prompted me to visit Amazon where I stumbled onto the fact that one of my Rock DVDs had been reduced in price. I didn’t expect anything here from Amazon as I might, say from Target but having nothing to lose I contacted Amazon. I was immediately issued a credit for the difference which now made this DVD more than ten dollars less than what Best Buy was asking. Oddly enough for this particular DVD Best Buy was actually offering the Blue Ray version for a few dollars less than the original DVD. This was likely an online pricing error which makes BB seem as if it in not competing well with itself.
The above was clearly not a scientific test. My search was not intended as a test but merely a consumer exercise. By charging so much more for the same products and not offering a couple of others to boot, Best Buy drove me into the arms of Amazon. Amazon’s easy and efficient service gave me a reason to extend loyalty. To search, compare, order and even receive a refund required almost no energy and proved frustration free.
I honestly wish Best Buy well. As my job is all about monitoring and editing retailer data, I want no retailers to fail. Certainly our economy cannot afford any more lost employment opportunities, especially on a grand scale.
Best Buy must learn that while an attractive, well run brick and mortar can attract customers and induce loyalties, selling on the Internet is less of a beauty contest and more about convenience and savings. In fact, the beauty of the Internet rests pretty much with convenience and then savings after the website proves itself instinctive, intuitive and comprehensive, therefore fun.