PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Electronics giant Best Buy Co., whose Web strategy so far hasn’t strayed beyond the music and video department, plans to go storewide with a major site expansion in the first quarter.
The Minneapolis company’s first step was to spin off BestBuy.com into a subsidiary headed by John C. Walden, former president and chief operating officer at online grocer Peapod.com. Walden joined Best Buy in May as vice president of electronic commerce.
Best Buy’s move mirrors those by Nordstrom and other retailers to give their Web stores the autonomy and resources needed compete online. Best Buy sells everything from computers to refrigerators offline, but its Web presence has been bare bones. Though online since November 1997, offerings have not expanded beyond CDs and DVDs. That’s set to change with the expansion, which will feature even more products than Best Buy sells in its bricks-and-mortar stores.
Øany analysts wonder why Best Buy hasn’t accelerated its online expansion, but chose to sit on the cyber sidelines for the holiday season. “We want to do it right,” says a spokesperson, “We don’t want to do it fast.”
The retailer also may have its hands full. Best Buy is in the midst of a physical store expansion, points out Gayle Marco, associate professor of marketing at Robert Morris College in Pittsburgh, Pa. “Now they have name recognition,” she adds, “that’s why you see e-commerce coming now.”
But name recognition may not be enough to fight off online competition. The race is on to dominate consumer electronics. Best Buy will need to one-up competitors such as Circuit City, Electronics.net, Crutchfield, Damark and Value America. Even J.C. Penney has a foot in consumer electronics.
Bricks-and-mortar retailers that wait too long may never catch up with what consumers want online, warns Preston Dodd, an analyst at Jupiter Communications in New York: “The expectations-and-forgiveness window has narrowed,” he says. Best Buy’s challenge is not only to squeeze through with more merchandise, but to drum up attention once it does.