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Best Buy: Grasping at Straws

forbes.com

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Re: Best Buy: Grasping at Straws

#21

Post by learc83 »

From working at Best Buy during college, a major part of their problem was the independence of the local management.

HQ would pass down all these lovely plans they spent millions to develop and test, then there was no real follow through. Store management just did whatever they wanted anyway.

We'd spend all this time at Saturday morning meetings learning about our new initiatives; how to relate to the customer and make recommendations instead of selling.

Then come monday it was back to the same thing we were doing before we wasted 300 hours of labor learning about some already forgotten scheme.

Another huge problem was they way they promote. Supervisors and managers were almost universally promoted completely based on sales ability.

For some reason they couldn't quite figure out that sales ability and management are two completely unrelated skills.

Re: Best Buy: Grasping at Straws

#22

Post by apsurd »

rodly wrote: post #6

This is an interesting example of how disruptive technology is. E-commerce is just too powerful a force and the low costs and ease of use will soon demolish our conceptions of what a retail store should be. With rising gas prices, no one wants to drive to a store, spend time searching for products, and be subject to annoying taxes and price hikes that B&M need to have to profit. It's an interesting but scary proposit…

downvoted for short-sidedness

Re: Best Buy: Grasping at Straws

#23

Post by thematt »

thedragon4453 wrote: post #13

I think there are several problems with Best Buy. * only seems to stock the cheap crap with high markup. You quickly learn to avoid this (looking at you, monster cable.) * Staff is not knowledgeable. There is not a lot of imperative to buy at Best Buy, since you get the same level of help as you do at an online retailer - at best, none. At worst, misinformation. You generally figure it out based on reviews and resear…

Frye's is a brick and mortar retailer of electronics and they seem to be doing pretty well. Granted, they're in the same boat in terms of customer service, but they've at least found a market for themselves.

Re: Best Buy: Grasping at Straws

#24

Post by prodigal_erik »

jballanc wrote: post #15

When I, and Ron Johnson, still worked for Apple, he told a story that has stuck with me. As he told it, he was talking with the CEO of Williams Sonoma who was complaining about the difficulty of getting people to make return visits. "If you need a pot, you come in to the Williams Sonoma, buy a pot and leave. You don't come back unless you need another pot or something else for the kitchen...and how often is that?" Jo…

It didn't, though. Apple was circling the drain for many years until the iPod and iPhone saved them. At this point they've even taken "computer" out of their name.

Re: Best Buy: Grasping at Straws

#25

Post by va_coder »

shalmanese wrote: post #14

I don't know if the economics of this make sense but it's always seemed to me that the logical end goal of this is that brick and mortar stores should refocus as marketing arms of manufacturers. That is, they should price goods basically at cost such that they're economically indifferent to whether a sale is made or not but charge manufacturers a significant sum for shelf space and promotion. Lots of goods genuinely…

"In effect, B&M stores have been giving a huge, inadvertent subsidy to online stores the entire time and I can't help but imagine that's what's really crippled their businesses."

True, but on the other hand online stores subsidize B&M too. I've often looked at the ratings on Amazon and then bought something at a B&M because I wanted it right away or wanted an easy return, if needed.

Re: Best Buy: Grasping at Straws

#26

Post by shalmanese »

va_coder wrote: post #25
shalmanese wrote: post #14

I don't know if the economics of this make sense but it's always seemed to me that the logical end goal of this is that brick and mortar stores should refocus as marketing arms of manufacturers. That is, they should price goods basically at cost such that they're economically indifferent to whether a sale is made or not but charge manufacturers a significant sum for shelf space and promotion. Lots of goods genuinely…

"In effect, B&M stores have been giving a huge, inadvertent subsidy to online stores the entire time and I can't help but imagine that's what's really crippled their businesses." True, but on the other hand online stores subsidize B&M too. I've often looked at the ratings on Amazon and then bought something at a B&M because I wanted it right away or wanted an easy return, if needed.

I imagine the cost of developing and maintaining an online review system is relatively trivial in the overall scope of running an online business. Your example is just online vs B&M competing on their own merits. OTOH, it costs real money to hire knowledgable salespeople and real estate for attractive displays.

I don't know if this is a causal relationship but I noticed companies drastically cutting back on the quality of salespeople around the time online shopping became big. This would make sense economically as stores could no longer capture the full economic value of good service. OTOH, for vertically integrated stores like Apple, the incentives are aligned and the quality of staff is noticeably higher.

Re: Best Buy: Grasping at Straws

#27

Post by jasonkester »

My new philosophy: If Amazon doesn't sell it, it's not for sale.

Roughly 100% of the electronics, toys, and assorted crap that I purchase comes to my front door. Certainly everything that you could imagine a store like Best Buy selling, I just buy online these days. And I'm by no means ahead of the curve in this respect.

I'm sure there's still a store in my town that would sell me a television. But I have no idea where it is.

Re: Best Buy: Grasping at Straws

#28

Post by guynamedloren »

HDMI cable query, first search result:

$13 - Best Buy

$6 - Amazon

HDMI cable query, most expensive on first page:

$696 - Best Buy

$14 - Amazon

That's why Best Buy is dying. If the meaning is unclear here, my comparison represents how distorted and convoluted Best Buy is as a company.

Re: Best Buy: Grasping at Straws

#29

Post by fruchtose »

The bottom end is Best Buy's biggest problem--mainly that this is how Best Buy makes money. Much of what Best Buy sells requires no physical interaction with consumers. This is as much about experience goods as it is about Best Buy's market. There are a variety of experience goods sold online--headphones, iPods, laptops, TVs, musical equipment--and its probable that a large number of these sales are not decided because a consumer walked into a physical store and experienced the product beforehand.

For instance, the first headphones I spent more than $30 on where a pair of Audio-Technica M-30s. I could not find these headphones in a physical retailer. I found them online, and I bought them purely based on the recommendations of others. I now own a pair of Audio Technica M-50s, which I bought based on the experience of the first pair of Audio-Technicas and the recommendations of others.

The element not explored in the article is authority. Authority plays a big role in how we buy things. Best Buy is perceived to have little authority; they hold little regard for consumers and have questionable customer service. Newegg, on the other hand, treats consumers well, and consumers come back to the site. Apple stores have authority, because Apple has created the impression in people's minds that you can go to the store to get your electronics needs fulfilled.

The other variable is price. jrockway commented here that he wouldn't buy a $60 USB cable from Best Buy. Why? Because he knows USB cables are much cheaper online, new or used. The problem here is price and authority. Best Buy reduces their perceived authority when they sell generic goods obviously overpriced. Best Buy is selling cheap goods as expensive goods; their biggest obstacle to success is people's knowledge that Best Buy is overcharging you. That is the symptom (not the cause) of their issues; knowledge for most people is irreversible.

What does Best Buy actually need to do? Get their authority back. Give people a reason to come back to Best Buy. Actual customer service goes a long way.

Re: Best Buy: Grasping at Straws

#30

Post by JunkDNA »

I'm having trouble locating the source, but 5 - 10 years ago (when Best Buy was flying high) I read an article that talked about Best Buy's financials and it revealed that a massive portion of their profits came from (mostly impulse) buying of CD's and DVD's, not all the big ticket electronics and appliances. This was one of the reasons all that stuff was in the front of the store right by the registers. I remembered wondering at the time what their long-term plan was for extracting themselves from that dependency once it was commonplace for those goods to be entirely digital. Apparently they didn't have one.
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