At BestBuy.com, the mission is integration with the store and the brand
An early mistake that many traditional retailers made when they entered the online environment was to treat the web site as a unique operation, separate and distinct from store-based operations, computer systems, databases and management structures. Those who took that route quickly realized it was a high-priced ticket to failure, simply because their new web businesses did not leverage the substantial assets of their traditional store operations and the stores did not benefit from the new, high-tech experience of their web sites. But consumer electronics merchant BestBuy Co. Inc. believes it avoided suffering through this painful experience by starting out on the web with the right strategy—one based on integration with the stores. “From the beginning, we believed that to be successful on the Internet our web site had to be totally integrated with our stores and our brand,” Scott Bauhofer, senior vice president and general manager of online stores at BestBuy.com, told attendees at eTail 2002.
From its launch in June 2000, BestBuy.com has built traffic to a current rate of 200 million visits per year, or to two-thirds of its annual traffic at its 2,000 stores in the U.S. and Canada. It has done so by treating the web as an extension of its stores and by integrating both channels into an overarching merchandising and operational strategy. Thus, its Sunday newspaper inserts that feature specials carried at the store is also posted on the web. Its web site promotes the practice of ordering merchandise on the Internet and picking it up at the store, something Bauhofer explained is a “significant percentage” of web order fulfillment. Conversely, the web site carries hundreds of accessories that are not practical for stores to inventory and yet are required by the chain’s customers, such as ink cartridges for obsolete computer printers.
Much of the chain’s web site is devoted to providing highly detailed product information designed to allow customers to perform their shopping research online, while making the actual purchase at the store. “Much more detail about products can be posted on the web than can be printed on the five lines available on the product tag in the store,” noted Bauhofer. “The customer can compared products by price and brand on the web, and when they understand the exact value equation, they often upsell themselves.”
Increasingly, BestBuy is also integrating the web into its stores. Most outlets, for example, already have some 20 web stations which are used to train the chain’s 70,000 sales associates on its product lines, and about half of those can be used by customers as well to conduct in-store product research. And in about one-quarter of the chain’s outlets, the web is used to provide sales associates and customers alike with online inventory updates.
How does this integration translate into sales? Bauhofer provided few details on e-commerce sales at BestBuy, but he offered one key figure indicating the success of its channel integration strategy. Fully 40% of the chain’s $20 billion in annual sales are directly or indirectly affected by its customers’ use of BestBuy.com. “We’re touching $8 billion of sales in some way through the web site,” said Bauhofer. But he argued that the success of the company’s web site cannot be viewed in isolation from the results of its stores. “The Internet,” said Bauhofer, “is an essential selling tool, but it is a multi-use tool, not a single-use tool.”
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