Retail Case Study: Best Buy’s E-Commerce Journey
The dramatic shift to online commerce in 2020 forced many retail stores to switch their retail strategy almost overnight. Best Buy, a US electronics retailer with almost 1,000 physical stores at the start of 2020, was one of the companies that had to quickly adapt to this new shopping trend. The company believes that the pandemic-driven shift to online shopping will become permanent, and in fact, has inspired many experimentations to further enhance their customers’ shopping experience.
Best Buy’s e-commerce journey in 2020 was a remarkable success as their online sales increased over 100% on various occasions. Join us as we break down their e-commerce success story or you!
April 2020 – Best Buy’s online sales in the US up by 250%
In April, Best Buy reported that its online sales in the US increased by 250% when compared to a year ago. Moreover, almost 50% of its online orders were picked up in stores.
“We have retained approximately 70% of our sales compared to last year since moving to our enhanced curbside service model,” said Best Buy CEO Corie Barry.
“This is a testament to the strength of our multi-channel capabilities – as our domestic online sales are up over 250% and approximately 50% of these sales are from customers choosing to pick up their products at our stores since moving to our curbside service model.”
Source: Best Buy online sales up 250%; furloughing nearly all part-timers
May 2020 – Best Buy’s online sales account for 42% of its US revenue, an increase of 155.4% from 2019
In the first quarter of 2020, Best Buy’s online revenue was $3.34 billion, a 155.4% increase from a year ago. It was also observed that the demand for gaming and computing was particularly high during the pandemic; while other categories lacked behind.
During this time, Best Buy also tested different strategies to further grow their e-commerce business, “We have taken the opportunity to accelerate aspects of our strategy as this environment has quickly shifted the ways in which customers interact with retailers,” said Corie Barry, CEO at Best Buy.
Source: Best Buy online sales now 42% of US revenue, up 155.4% in Q1
July 2020 – Best Buy reports increase in sales, bringing back furloughed workers
Best Buy brought back almost half of its furloughed workers as sales surged throughout Q2; driven by a need for more customer service to ensure smooth operations.
“Strong consumer demand, combined with shopping experiences that emphasize safety and convenience, has helped produce our sales results to date,” Best Buy CEO Corie Barry said.
“None of this would be possible without the effort and energy of our front-line employees working in stores, supply chain facilities and customers’ homes.”
Source: Best Buy reports strong sales as it brings back furloughed workers
August 2020 – Best Buy’s e-commerce sales up by 242% in Q2, accounting for 53% of total revenue
At the end of the second quarter, Best Buy reported a 242% increase in e-commerce sales from the same period last year as traffic to its website surged. By this point, the retail chain’s domestic online revenue is now 53% of its total domestic retail revenue.
In addition to offering delivery alternatives like curbside pickup and BOPIS (buy online pick up in-store), Best Buy was also looking into how their physical stores could be repurposed to fulfill online orders. This was a great move since focusing on the customer’s delivery experience is the most important factor in increasing customer satisfaction and retention.
As aptly put by Nabil Malouli, VP Global eCommerce at DHL:
“It’s becoming more and more obvious that e-commerce giants are investing considerably to improve their logistics. The quicker the delivery, the greater the likelihood of conversion. The clearer the information about payment and delivery time, the more your customers will convert.”
“A successful delivery experience leaves customers satisfied, which in turn can lead to lifetime customer retention and loyalty.”
Source: Best Buy’s web sales grow 242% in Q2 to a record of nearly $5 billion
November 2020 – Best Buy’s domestic online sales grew 174% in Q3; online sales increased to about 35.2% of total revenue
“From a revenue standpoint, we believe our Q4 sales growth will be positive, but we don’t expect sales trends to remain at the levels we experienced during Q3,” said Matt Bilunas, Best Buy’s Chief Financial Officer.
Domestic online revenue of the retail chain reportedly grew 174% in Q3 when compared to the same period in 2019, bringing in $3.82 billion in the quarter. Best Buy also observed re-engagement from customers lost during the pandemic in Q3.
“We have seen elevated growth in new customers since the beginning of the pandemic. In Q3, we also saw strong growth in customers we haven’t seen in a while, who have re-engaged with us as well as sales growth from our current engaged customers,” said Best Buy CEO Corie Barry.
Source: Best Buy’s domestic online sales grow 174% in Q3
December 2020 – Online sales up by 90% in Q4; making up 25.4% of US sales during the holidays
Wrapping up the holiday season, Best Buy reported total domestic revenue to be $13.85 billion, with online sales contributing 25.4%. Online revenue has also increased by $561 million to $3.52 billion in Q4 from $2.96 billion.
During the holiday season, Best Buy offered their consumers pickup for online orders within 1 hour and free next-day delivery to their homes. Aside from that, Best Buy had over 2,000 locations for consumers to pick up their online orders.
Source: Best Buy earnings beat expectations, but shares fall as sales growth slows
February 2021 – Best Buy saw average foot traffic up 1.5% in Jan 2021
Since its reopening of stores, Best Buy’s in-store traffic has gone up, which prompted an increase in hiring for customer service roles. It is reported that the average foot traffic in the retail chain’s stores increased by 1.5% in January 2021.
Source: Retail Sales Up 9.2% in January, Hardware Shows Biggest Gain
Whilst it may seem that Best Buy’s quick adaptation to e-commerce was key to its success, the truth is Best Buy had begun investing in its omnichannel commerce before the pandemic. Nevertheless, despite being a large retail chain, Best Buy has proven how swiftly it was able to adapt to the shifts in consumer behavior and needs throughout 2020.
“… [Even before the pandemic,] we assumed digital penetration was going to increase. We needed to double down on our fulfillment mechanisms and put the customer in control. What we thought might take three to five years to penetrate happened overnight.
“One of the greatest things was all of the supply chain investments we have been putting in place for literally four years. We flexed all of those up to meet that large-scale demand. But we also put the customer in control [of how they wanted the order fulfilled.] It did not matter to us,” said Best Buy CEO Corie Barry.
“We just need to agnostically meet that customer wherever they are. That is going to be the future of retailing. I don’t think people will revert back to their 2019 behaviors.”
So, will e-commerce ever take over physical retail shopping?
Looking at the e-commerce journeys of Best Buy and Lululemon got us wondering if e-commerce will ever take over the retail shopping experience.
What do you think? Leave us a comment on our LinkedIn page to let us know your thoughts! Do keep a lookout for our upcoming studies as we examine the question of whether e-commerce will ever take over physical retail shopping.
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