News Feature | October 3, 2013

Best Buy's Web Traffic Surges After E-Commerce Update

Source: Retail Solutions Online
Sam Lewis

By Sam Lewis

CEO Hubert Joly is delivering on turnaround promises

Best Buy hasn’t had a whole lot to be happy about in recent memory. In 2012, the company’s stock dropped to its lowest price in nine years, and profits seemed to have evaporated. Now, Best Buy has turned its frown upside down through a series of updates to its business plan and renovating its antiquated e-commerce presence.

Best Buy revealed its new rewards program last month, and for many customers, the initiative had a familiar ring. “My Best Buy” sounds a lot like “My Macy’s” or “My Lowe’s.” The nomenclature makes it seem that each retailer is focusing its rewards on the individual shopper, which enhances the shopping experience.

The company’s CEO, Hubert Joly, realizes that fact more than anyone. In fact, the company’s e-commerce platform will be completely revitalized around the idea. Updating the almost decade-old site will be a massive achievement, but Best Buy is prepared to do it. The company can grab ahold of the e-commerce market simply by using its name as the largest consumer-electronics retailer. The renovation efforts to the website appear to already be paying off, as online traffic rose nearly 10 percent in August 2013, versus August of 2012. “They’re the 800-pound Gorilla,” says David Strasser, a Janney Montgomery analyst. “After struggling with no real Internet expertise, they’ve brought on a pretty strong team.”

The changes made to the e-commerce site have benefitted Best Buy, but the growth hasn’t been enough to catch online giant Amazon. However, the improvement does give the company some wiggle room, as it attempts to translate site visitors into buyers. Of those who visit, just over one percent makes a purchase. This figure is about half the average rate among retailers. Joly is setting the bar high with a target of doubling Best Buy’s online sales, up to 18 percent. The plan won’t happen overnight though, and Joly knows it. “There is no reason it should be lower,” Joly said in August. Making Best Buy a viable competitor of online counterparts “is going to be a two or three year journey.”

Nearly two months ago, a piece was written asking the question, can planned e-commerce upgrades save Best Buy? As time has progressed, and results of on-going changes keep pouring in, the answer seems to be pretty clear. Yes, Best Buy appears to be on the path to redeeming itself. It will need to continue mimicking the best practices of successful retailers in its climb back into relevance. Once that happens, the company can feel free to experiment with new initiatives and innovations; the kinds of things that once made Best Buy great, and may someday again.