Best Buy, Sharper Image, L.L. Bean share growth strategies at Shop.org
Although online retailers can’t name a single formula for maintaining growth as retail competition continues to mount, one common trait of top retailers is a willingness to constantly monitor performance and respond to shortcomings with flexible strategies, executives of Best Buy Co. Inc., Sharper Image Corp. and L.L. Bean told an audience at Shop.org this week.
Mary Lou Kelley, vice president of e-commerce at L. L. Bean, said online retailers face competition that will surge over the next few years, as Wal-Mart Stores Inc. and other leading mainstream retailers expand and improve their efforts to sell on the web. “We all have to understand and be ready for what Walmart.com will be doing in five years,” she said.
But it can be impossible to carry out all best practices, executives said. Best Buy’s BestBuy.com discontinued a global free shipping promotion last summer, after a two-year run, to focus instead on a free-gift-with-purchase offer that has exceeded the free-ship offer’s impact on sales, said John Thompson, senior vice president of Best Buy and general manager of BestBuy.com.
But as Best Buy terminated its global free-shipping offer, it also expanded its store-pickup option for online orders. The volume of in-store pickup orders in the 2004 holiday shopping season was three times that of the 2003 holiday season, Thompson said.
Indeed, Best Buy’s store pick-up service has produced additional benefits, the retailer said. One of the biggest challenges facing BestBuy.com has been to replicate the service that blue-shirted sales associates provide in Best Buy stores. But store pickup is proving to be a great way to extend the blue-shirt service to online shoppers who come into a store to get their order, Sam Taylor, senior vice president of online stores and marketing, said in a session earlier this week at the National Retail Federation’s Redefining Retail conference and expo. (The NRF is the parent organization of Shop.org.)
Store pickup also helped Best Buy push its online sales later into the holiday season, with increased volume extending to Dec. 24, Thompson said.
But while rolling out its store pickup and free-gift programs, Best Buy has fallen behind in another shopping feature, online redemption of gift cards, that it figures will also drive growth. Best Buy had a 30% year-over-year increase in holiday season gift card sales, but because customers can redeem gift cards only in stores, it has been able to recognize a revenue boost only in stores. “It’s a huge customer disappointment that we’ve known about for two years,” Thompson said, adding: “It’s a huge issue for us that will be corrected by mid-year.”
At Sharper Image, online sales for the 2004 holiday season were off their usual pace, rising only 3.5% year-to-year instead of a more usual 35%, said Roger Bensinger, senior vice president of marketing. Part of the reason for the fall-off, he said, was low supplies of Apple Computer Inc.’s iPod digital music player, one of the season’s hottest products.
But Bensinger added that Sharper Image also could have e-mailed customers more frequently during the holiday season, instead of sticking to a once-a-week schedule. One of his goals for this year, he said, is to conduct more personalized e-mail marketing campaigns to segments of customers, a tactic that would allow Sharper Image to increase e-mail frequency without alienating customers, he said.
At apparel and outdoor sports equipment retailer L.L. Bean, growth-enhancing policies include optimizing web pages on a daily basis, Kelley said. Its most popular features include a “save for later” shopping bag that lets a shopper come back to the site at a later time, check what she had picked and continue shopping.
L.L. Bean is also considering ways it can develop communities of consumers attracted to its site, such as through its online customer-submitted photo contest. And it will continue a focus on providing consumers access to information like order status. “They want more control,” she said.
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