Article from Forbes: Why Best Buy is Going out of Business...Gradually

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dc_fortythree

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Excellent article on the current state of Best Buy. The excerpt below addresses the issue some CAGs (incl. me) encountered this past BF through Christmas.

http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/


"An article in the Minneapolis Star Tribune, the company’s hometown newspaper, reported a few days before Christmas that the company had only just informed some customers that online orders, some placed the day after Thanksgiving, couldn’t be filled and were being cancelled. The out of stock items included the most popular items, including TVs and iPads, “as well as other tablets, cameras, laptops, PS3 games and the Nintendo Wii.”

http://blogs.forbes.com/erikamorphy/http://www.forbes.com/sites/davidcoursey/2011/12/30/apple-amazon-lead-5-most-admired-tech-companies/http://blogs.forbes.com/davidcoursey/The company issued a statement that read: “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders.”


Let’s parse that sentence for a moment. The company “encountered a situation”—that is, it was a passive victim of an external problem it couldn’t control, in this case, customers daring to order products it acknowledges were “hot” buys. This happened, inconveniently for Best Buy, during “the November and December period,” that is, the only months that matter to a retailer. For obvious reasons, the statement ties itself in knots trying to avoid mentioning that the “situation” occurred during the holidays.


The situation that Best Buy “encountered” has “affected redemption” of some orders. Best Buy doesn’t fill online orders, it seems. Rather, customers “redeem” them. So it’s the customers, not Best Buy, who have the problem. And those customers haven’t been left hanging; they’ve only been “affected” in efforts to “redeem” their orders. It’s not as if the company did anything wrong, or, indeed, anything at all.


It’s all so passive. It’s also a transparent and truly feeble pack of lies. Here’s what the honest and appropriate release would have said: “Due to poor inventory management and sales forecasting of the most popular products during our key sales season, we can’t fill orders we promised to fill weeks ago in time for Christmas.”"
 
Customer service has been a foreign idea at Worst Buy for a long time, so none of this comes as a shock.

When people in the other forum say that Best Buy is eating Amazon's lunch with sales, they should keep this in mind. Best Buy is doing it because they are desperate for market share, which they are losing. In the long-term, they aren't going to be able to maintain.
 
Yeah, Best Buy is on the way out. Only reason they're still around is that Circuit City died so they don't have much competition in a lot of towns beyond Target and Walmart. And those stores have lower quality electronics and less selection in movies and music generally.

As more people move to buying that type of stuff only online (as I have for the past few years for the most part) they just aren't going to be able to keep up.

I bought a Bluray with in store pick up on black friday as it sold out online. Went to pick it up a few days later and had to wait over an hour before they found it--and it was in the pick up bins where it was supposed to be. The numbskull just didn't see it at first and assumed it was still out on the floor as they were way behind on gathering in store pick up items. At least he gave it to me for free (it was on sale for $5) which was a nice gesture. But it was still over an hour of wasted time on my part which will cause me not to use instore pick up with BB anymore. I'd rather just pay a little more or wait for a comparable sale on Amazon and have the convenience of getting it delivered with Prime shipping.
 
[quote name='Javery']That is inexcusable behavior. They should not be accepting orders they aren't 100% sure they can fulfill.[/QUOTE]

That's the problem with instore pick up. There's no way they can be sure to grab it from the floor before a customer buys it. Especially during the super busy x-mas shopping period.

So sometimes they have to cancel an order as the system had is as available, but it's gone before they can find it and put it away for pick up.

Just a stupid system they should discontinue (at least during the holidays).
 
[quote name='dmaul1114']That's the problem with instore pick up. There's no way they can be sure to grab it from the floor before a customer buys it. Especially during the super busy x-mas shopping period.

So sometimes they have to cancel an order as the system had is as available, but it's gone before they can find it and put it away for pick up.

Just a stupid system they should discontinue (at least during the holidays).[/QUOTE]

Their in store pickup works for me every time as long as I get the conformation to pick up. Never had a problem even during holiday. Only problem I encountered was when they grabbed the wrong item once
 
[quote name='62t']Their in store pickup works for me every time as long as I get the conformation to pick up. Never had a problem even during holiday. Only problem I encountered was when they grabbed the wrong item once[/QUOTE]

I've had issues with it more often than not. Only once was it as extreme as my example above. But otherwise I've always had either long lines at the pick up and/or the person takes 10 minutes to find it. So it just always ends up being a waste and I could have just found it myself and paid at the regular check out faster.

So I just don't bother with it. I pretty much just buy all my games, music and movies from Amazon these days. I'm not as much of a cheapass/bargain hunter anymore. I make real money now (unlike when I was a broke ass student when I joined CAG) and lack of free time is more of an issue than having money to afford games, Blurays and CDs. So I'm more than willing to pay a bit more sometimes to just order online and not have to hassle with going to a B&M store.
 
I've done in-store pick up once, and as the article pointed out, it took longer to go through the CS line to pick up the item I already "purchased" than it wouldve if I went through the normal register line. Its like calling in a pizza for carryout but they dont start making it until you get there. The experience was overly complicated. They should just have a line with a rep dedicated to in-store pick up.
 
[quote name='dc_fortythree']I've done in-store pick up once, and as the article pointed out, it took longer to go through the CS line to pick up the item I already "purchased" than it wouldve if I went through the normal register line. Its like calling in a pizza for carryout but they dont start making it until you get there. The experience was overly complicated. They should just have a line with a rep dedicated to in-store pick up.[/QUOTE]

The local stores here did setup 2 lines, one for return and one for pickup
 
[quote name='62t']The local stores here did setup 2 lines, one for return and one for pickup[/QUOTE]

The problem is that they are usually served by the one customer rep that is at the desk.

I actually went to BB to pick up an online order. Stood at the place where I thought I was supposed to stand (it was only marked on the barrier and had no sign in front of it.) and proceeded to wait there while the guy called up someone from the CS line. Thinking I was in the wrong line, I went into the CS line, where I waited for the guy to take the PS3 he had and hook it up to a testing rig. (Why he was doing that, I had no clue.) In the meantime, someone stands where I was and gets helped by someone else. Thats when I knew I was right the first time.

Guy fiddling with the PS3 calls me up next (after ignoring me the first time.) and goes back to get my item and completely misses it. I managed to point it out to him because I could see it from where I was standing. Overall, it took 20 minutes, when it could have taken just 5 for me to walk to where the shelves were and pick one up.

Course, no retailer has gotten pick up at store right. it is worse at Wal-Mart, which is ship to store. You go to the back, which isn't even manned, ring the bell and hope someone shows up in a reasonable amount of time, then they have to search for your order.
 
The only place I've had a semi-decent in store pick up experience was Lowes.

I bought a Keurig Coffee maker last week online with in-store pick up as it was 20% off and I was out of town, so that was my only option as the sale was ending before I got back in town.

They had it up front and had no problem finding it. Still took about 10 minutes as you just get it at the customer service counter and there was a line of returns I had to wait in.
 
[quote name='62t']The local stores here did setup 2 lines, one for return and one for pickup[/QUOTE]

My Best Buy also has separate lines, but the problem (IMO) is that the lines are managed by the same staff. So youre still burdened by customers that have more time consuming issues. It would be so much easier (and enjoyable) of an experience if there was dedicated staff just for pick up. To me there's absolutely no reason to use the service if going to the store, picking out the item from the shelf, and paying at the register is faster.
 
[quote name='dc_fortythree']My Best Buy also has separate lines, but the problem (IMO) is that the lines are managed by the same staff. So youre still burdened by customers that have more time consuming issues. It would be so much easier (and enjoyable) of an experience if there was dedicated staff just for pick up. To me there's absolutely no reason to use the service if going to the store, picking out the item from the shelf, and paying at the register is faster.[/QUOTE]

Well, there should be no reason. I've had to have Best Buy do the "Price match their website" song and dance too many times. It's usually faster for me to just wait in the line than to wait for a store manager to authorize a price match that they have to look up to verify. 'Course, that's another problem entirely.
 
The only place I've had a semi-decent in store pick up experience was Lowes.

I bought a Keurig Coffee maker last week online with in-store pick up as it was 20% off and I was out of town, so that was my only option as the sale was ending before I got back in town.

They had it up front and had no problem finding it. Still took about 10 minutes as you just get it at the customer service counter and there was a line of returns I had to wait in.
 
You want a sad tale of best buy, look at how well they did in the U.K.
They opened a handful of stores and ran an online shop in spring 2010. In autumn of 2011, they started closing up all their shops and the website. I don't really know what they were thinking, opening up here when so many long standing shops had already gone out of business to the likes of online sellers and the big supermarkets.

Kind of feel bad for them as I used to really like their shops back in the 90s.
 
Best Buy has a ton of problems. They have never been able to really tackle the online side of the business. It has always been an after-thought for the company. Same goes with the customer service side of the operation. Best Buy does not treat retail purchases the same way it treats online purchases in terms of customer service resources. Bestbuy.com is basically a second class citizen in terms of Best Buy's corporate views and this viewpoint shines through when using Bestbuy.com. Bestbuy.com has always been treated as an after-thought. The company was late to the online market and they have never been able to catch up.

Bestbuy has really become a showroom for Amazon. Traffic in the stores is still pretty healthy. Unfortunately a lot of people just go into Best Buy to look at products they are going to order online from other retailers. There is really very little Best Buy can do to combat this at this point in time. BB is part of the retailer group that is heavily lobbying congress for online sales tax. This would be a pretty big win for BB if they end up being successful as it does take away one of the major reasons a lot of people order online.

Another major issue for the company is cost structure. Best Buy is tied down to a massive amount of expensive retail space that simply isn't needed. The stores need to be smaller with a tighter product mix. They have started shrinking some stores but they aren't moving very fast.

The pay structure at BB is also horrible. They pay the hourly workers nothing but the GM of the store you are shopping in makes anywhere from $80-$120k before bonuses. BB simply can't keep staff that actually cares given the pay scale in place at the company. A manager of a BB retail store simply should not be making 6 figures, regardless of store size.

The past 5 years Best Buy has been 100% focused on cutting costs internally. What this has meant is making fewer people do more. BB spent around $70 million developing and implenting the OMS order system which was supposed to streamline the customer experience while saving the company approx $50 million per year in labor and taxes. This has been a huge bust for the company. It hasn't delivered any of the cost savings that it was supposed to and has been a huge pain for consumers in terms of order creation and modification after the fact.

Finally, Best Buy just isn't making money. They did take market share during this past Xmas but their margins were HORRIBLE. At this point Best Buy just can't gain market share with healthy margins. Part of this is due to the companies reliance on what has become very low margin products (tv's, movies and laptops). They have been doing quite well in the wireless, tablet area lately and they have gained some nice marketshare in appliances from Home depot, Lowe's and Sears, an area BB has struggled in for years and does offer the company some nice margin improvements if they can continue to improve in the area. BB currently has a 5% market share in appliances compared to the industry leader Sears of about 25% so there is a lot of room for improvement.

I'm not ready to say BB is done as they do still have time to change but they certainly need a change in upper management and they definately need to do a lot of work in terms of streamlining the customer experience both in the stores and online.....especially online.
 
If Best Buy really wants to survive they probably need to downsize and focus on electronics and appliances, and not so much on games, movies and music where profit margins are low and they simply can't beat online store prices consistently. But a lot of people want to buy things like TVs and appliances locally, and there aren't many options any more. So BB could do well their if they streamline their stores around that, cut wasteful spending like the manager's salaries you note etc.

As for online sales tax, I'm curious how much difference that makes in peoples decisions. It wouldn't affect me at all as I order online more for the convenience than to save money. And I actually support having sales tax for online purchases as state's need the revenue and it's too much burden on consumers to keep track of it and pay it on their own if they're ordering a ton of stuff online every year.

But on the other hand, there are tons of deal sites like this, so there are obviously tons of people obsessed with saving every cent they can on every purchase. So there are no doubt a lot of people who would buy less online if they had to pay sales tax.
 
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I walk into Best Buy and feel like their sole philosophy is just ripping people off. $60 games from 2006, horrible laptops they persuade mothers to buy at $600. I always feel I failed to save a life when someone comes to me with their laptop problems and tells me, "it's brand new, and it has windows 7. i got it at best buy."

rawwwarrwarwrrrrrrrr
 
[quote name='TheLongshot']Customer service has been a foreign idea at Worst Buy for a long time, so none of this comes as a shock.[/QUOTE]

The problem isn't with their CS, the problem is that they don't have any.. at least, not in store. Every time I go into a BBY, it seems like at least 75% of the employees are standing around and talking. When you ask them a question, their basic answer is "let me check on that" and they leave, and never come back.

I should say that this is usually with the younger employees, which seems to make up most of BBYs associates. The older people working there are great.
 
[quote name='BillyBob29']Best Buy has a ton of problems.....[/QUOTE]

great comment! :)

edit: i mean your entire post, just shortened it for quoting.
 
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