[SGVLUG] Why Best Buy is going out of Business gradually

[Christopher Smith]

Big customer facing brands like Best Buy are understandably likely
targets of customer frustration, but they also tend to get drawn out
of proportion. I think for a lot of people, they are like lawyers: you
hate them until they can help you.

The truth is there is a lot of value in a brick-and-mortar business
that focuses on providing as much available selection at competitive
prices, which is why customers are there in the first place. There's
are real trade-offs involved in those places. It simply is harder to
consistently provide a consistently level of customer service as
compared to an online retailer or a more upscale brick-and-mortar
business. The nasty problem is that *prior* to purchase, customers
tend to value lower price and broader available selection over great
customer service ("yes, Sears has it too, but they are charging $20
more for it and they don't have the one I want"), after purchase,
particularly with consumer electronics, it works backwards ("geez, I'd
gladly give up that $20 so that I could have product experience I
actually wanted").

I'm not a fan of Best Buy, but in a previous life I worked for a year
at a big box retail electronics store. Customers really do want to
have their cake and eat it too, and it is very, very hard to
consistently satisfy them. There are a disturbing number of outside
parties that such retailers rely upon in order to provide that level
of service, and they have to be very conservative about selecting
partners because their partner's failings end up making them look bad.
Even internally, it is a herculean task to ensure consistency of
quality throughout such a large operation (even online retailers
struggle mightily with this... talk to people who work inside Amazon
some day, it's brutal). A single bad experience mars a hundred good
experiences, so retailers try really hard (and obviously some try
harder than others) to avoid ANY bad experiences. My observation is
that this helps engender a sense that having the cake and eating it
too is actually possible, because the vast majority of the time
retailers actually find a way to deliver exactly that. This ironically
magnifies the blowback when they fail. The margin for error is
incredibly small, which is part of the reason you do see relatively
high turnover of even big, established brands in the space.
Consequently, most of these retailers (including Best Buy) have had
their epitaph written several times.

One thing I learned a lot about in that year was the relative
inefficiencies of the "mail order catalog" style of customer
fulfillment vs. the retail model. One of the reasons I love Amazon is
that they have been incredibly innovative at removing a lot
inefficiency (and shifting a lot of the pain for it to other parties),
but there are certain fundamentals about getting at least physical
objects to customers that the Internet by itself isn't going to change
that give the retail model significant advantages in a lot of
circumstances. That's why despite all their shortcomings, there have
been big box electronic retailers for much longer than there has been
CES, because the truth is that at least for a good chunk of the
population, a good chunk of the time, they represent the best choice.

So I actually think the Best Buy CEO got it precisely right: they
disappointed their customers, and there are a number of things they
need to improve upon just to meet forecasts, but they aren't even a
smidgen close to being run out of town; the Forbes article is a really
dubious hack job.

On Sat, Jan 14, 2012 at 7:44 AM, listreg <listreg_sr at ix.netcom.com> wrote:
> Found this response.....
>
> http://www.forbes.com/sites/ericsavitz/2012/01/08/best-buy-ceo-brian-dunn-responds-to-forbes-com-article/
>
> Stephen
>
> -----Original Message-----
>>From: matti <mathew_2000 at yahoo.com>
>>Sent: Jan 13, 2012 9:36 PM
>>To: "sgvlug at sgvlug.org" <sgvlug at sgvlug.org>
>>Subject: [SGVLUG] Why Best Buy is going out of Business gradually
>>
>>
>>
>>fyi - interesting read.. honestly I found myself agreeing with a lot of
>>what I read from this article. ( summary Best Buy = customer
>>disservice, thus losing to better competitors. )
>>
>>
>>Why Best Buy is Going out of Business...Gradually
>>http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/
>>
>>...
>>
>>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.
>>
>>...
>>
>



-- 
Chris