Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
(Page 2 of 4)
Best Buy Co. Inc. likes to survey its customers. Here’s what it found in the fourth quarter about how customers shop: 39% visit BestBuy.com before they buy something in the store; 19% told Best Buy the web heavily influenced their purchasing decisions. Thus it comes as no surprise when Lynn Morris, senior vice president of operations at BestBuy.com, says: “We’re no longer trying to maximize the dot-com business. We’re trying to build a brand for whatever channel consumers want to shop in.”
That sums up Best Buy’s multi-channel strategy. “Consumers want to be in control of their shopping experience and we have to figure out how we as a brand can deliver that,” Morris says.
Integrating the web into the retail chain has not been easy for most retailers, especially as attitudes about the web’s role have swung wildly since the early days. Morris likens the effort of making the channels work together to landing a jet on an aircraft carrier. But Best Buy has incorporated some fancy flying into its retail strategy for the web. And in fact Best Buy attributes to web influence a significant part of the company’s 28% increase in sales last year to $19.6 billion.
Know the customer
It all starts with knowing the customer. Thus one of Best Buy’s prime uses of the web has been surveys; 10% of web visitors participate in surveys, as do 1.5% of store shoppers. What has it learned? “This is one set of customers who don’t care what channel they are in—they want the same Best Buy experience,” Morris says.
Similarity of experience means giving shoppers as much information on the web as at the store, and then some. “To enhance the brand experience online means giving great information in the form of rich content and not necessarily driving people to the buy button,” Morris says.
BestBuy.com showcases information with Click-n-Learn and Great Deals & Offers buttons. Under Click-n-Learn, customers can use a shopping comparison tool, read about the newest products and get information on replacement parts, returns and warranties. Under Great Deals & Offers, customers can see what rebates are available both online and at the store.
Further, Best Buy has invested a lot of time and thought into making the site easy to move around, Morris says. “All the navigation features help customers shop, whether it’s in the store or online,” she says. The two shopping experiences are so tightly tied that 15% of online customers pick up their purchases at the stores.
Morris joined Best Buy in 1996 as inventory manager of general merchandise, after holding inventory positions at Victoria’s Secret stores. In inventory and supply chain, she says, “The mantra is having the right products in the right place at the right time.” The goal is not all that different from delivering products to online customers, although Best Buy had to reconfigure distribution operations to ship items to individuals in addition to sending pallets of goods to 1,900 stores.
Morris believes that even with 39% of customers researching products on the web before they buy and 19% saying the web site heavily influenced their purchases, Best Buy has not yet tapped the potential of the web. “We want to figure out how high we can go with the percentage of shoppers influenced by the web site,” she says.
In cross-channel integration, Best Buy is a leader, says Duif Calvin, vice president in the retail practice at consultants Scient Inc. She gives Best Buy high marks for meeting customer expectations in multiple channels. “From the beginning they wanted the Internet channel to be an extension of the customer experience in the stores,” she says. Calvin points out that BestBuy.com often features mid-range products because that is what the consumer is looking for. Other retailers follow the cue of merchandisers who want to feature what they want to sell, not necessarily what the customer wants to buy.
And that all gets back to surveying customers, making sure the offers on the web match the offers in the store and communicating that consistency to channel-agnostic customers. “We’re looking to drive integrated marketing even more, so we can increase customer service in the home via the web,” Morris says.
By Mary Wagner
LandsEnd.com has been growing faster than Jack’s beanstalk. But in 1997 when e-commerce marketing manager Terry Nelson joined Dodgeville, Wis.-based Lands’ End Inc., soon to become a division of Sears, Roebuck and Co., the web site was just a twig, with annual sales of $17 million.
Nelson signed on as a merchandiser and when he moved to the company’s e-commerce team 18 months later, it was with little direct experience on the web. He wasn’t alone. “At that time, very few people had web experience,” he recalls.
But what Nelson and the rest of the e-commerce marketing team didn’t know then, they’ve more than figured out now. LandsEnd.com sales soared to $299 million, 20% of the company’s business last year, up 30% from the previous year when the web accounted for 16% of sales. The year prior, the web had contributed only 10% of sales. “As a channel, it’s become very big very quickly,” Nelson says. He attributes that rapid success to Lands’ End’s 40-year history as a direct merchant, which provided a base that helped accelerate the move into e-commerce.
The rest of the story is LandsEnd.com’s leadership in customer-facing web innovation. It routinely rolls out tools that entice shoppers to the site and to load their carts higher at checkout. The parade of tools that other web retailers don’t have is a foundation of Lands’ End’s web strategy, in which Nelson has had a significant role.
“Our thinking was, why would a customer shop online versus the other channels and what experiences can we provide that are unique to the Internet?” Nelson says. “What sets this channel apart from the phone and the store is its interactivity. So we’ve focused our time and resources on building interactive experiences.”