5/28/14

Best Buy’s web sales grow 29%

The multichannel retailer chalks up its web sales spike to the chain-wide rollout of ship-from-store and more web orders placed in stores.

Bill Briggs , Senior Editor

It was a good first quarter online for Best Buy Co. Inc., thanks to more web orders shipped from stores. Earnings news was tempered by a dip in overall revenue.

The first quarter was the first full one that Best Buy was able to ship out of all 1,400 retail stores, which boosted online sales as well as conversion rates, president and CEO Hubert Joly told analysts on the company’s earnings call last week.

“In our online business, we continue to leverage our ship-from-store, digital marketing and enhanced site functionality to drive a 29% increase in domestic comparable online sales,” Joly told investors, based on a transcript of the call from Seeking Alpha. Web sales also got a lift from “a higher average order value, increased traffic driven by greater investment in online digital marketing and a higher number of online orders being placed in our retail stores,” Joly said.

“We also leveraged ship-from-store to drive improved margins on clearance and end-of-life inventory that has been historically trapped in our stores,” Joly said. “Our ship-from-store capability allows us to expose this inventory to our online customers, and with this exposure, we're beginning to achieve higher margins.”

Other contributors to web sales growth in Q1 included new gift centers for Valentine's Day, Easter and Mother's Day, and improved customer engagement through a 20% increase in the number of product reviews since the fourth quarter, Joly said.

For the first quarter of fiscal 2015 ended May 3, Best Buy, No. 15 in Internet Retailer’s 2014 Top 500 Guide, reported:

E-commerce upgrades planned between now and the holiday shopping season include “improving the shopping experience by implementing an improved homepage design, a more robust and streamlined wish list, significantly richer visual and editorial content, and enhanced search and navigation capabilities,” Joly told analysts. Best Buy also will add returned products to its online assortment and enhance the online scheduling of home delivery and installation, he added.

Many of the Q1 web sales results and e-commerce site enhancements stem from the company’s Renew Blue turnaround program announced in fall of 2012, Joly told analysts.

Topics:

2015 earnings, 2015 Q1 earnings, Best Buy, Best Buy earnings, Hubert Joly, Renew Blue, Top 500, web sales growth

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