Best Buy- case study

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Best Buy Loses Customers Due to Online-Only
Competitors
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Your Local Showroom

• Best Buy has been facing a difficult issue with
  customers visiting their stores to view and test
  certain products. This is not beneficial to the
  store, because once the customer knows what item
  and model they want to purchase, they go
  elsewhere, specifically on the internet, to shop
  the best price and have it shipped to their door
  (Team, 2012). The following slide shows how
  businesses are being affected by this current
  situation.

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Direct Effects on BusinessWe Know Love
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Who is Being Effected

• Because Best Buy was losing sales as a result of
  Showrooming, the shareholders of the publically
  traded company were incurring losses. In
  addition, communities were losing tax revenue
  when their local Best Buys would have to shut
  down. These stores are often housed in large
  properties, so vacant buildings can decrease the
  real estate value of neighborhood as well.

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Who Else is Being Effected

• There is also the human side of failing
  businesses. People are at risk of losing their
  jobs and, in turn, their livelihoods when a
  company is not being productive.
• The personal touch is lost in an online only
  model. Some families, and especially senior
  citizens, do not have easy access to
  online-buying, which makes the loss of a
  brick-and-mortar store a real disadvantage.

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Price Matching to HelpRetain Customers

• Best Buy has decided to extend their Holiday
  Season event of price-matching to be a permanent
  occurance. This is believed to keep customers
  coming to their store and to help ensure they
  make their purchases on site.
• Theyve also formed relationships with Apple and
  Samsung to create a new store-within-a-store
  model.

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Its an Online World, Keep Upwith the Technology

• Best Buy has had many complaints about its
  website in the past. One thing they can do to
  help boost sales is something they have already
  discussed doing, enhancing their website and
  making it more user friendly. The article states
  that Best Buy plans to invest 750 million on
  different areas of improvement, website being one
  of them.

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Promising Future

• The recent changes that Best Buy is implementing
  are causing some to call them the next Home
  Depot, a retailer that also recently improved
  their situation by making changes to their
  business model. The rosier outlook has been
  reflected in their stock price

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potential solution(s) to resolve the issue

• In the last few years, Best Buy has been used as
  a perfect example of a businesses that is heavily
  affected by online retailers. The main challenge
  for Best Buy has been more competitive online
  sellers and the problem of show rooming within
  its stores. Below are some ways to deal with this

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Tackling problem of online stores

• The best way to combat the problem of online
  competition is by setting up an ecommerce website
  to put itself at par with the competition. The
  company has already considered this among its
  budgeted upgrade projects.

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Solution to show Rooming

• The company has become less profitable as
  customers only come to the stores to look at the
  product features and price then buy the product
  online at lower prices.
• The best way for the company to deal with it by
  making sure that the company converts show
  rooming customers. The company can do this by
  improving its customer service.
• In addition, the company should expand its
  product mix from selling large electronics like
  the Television to other products with a lower
  warranty margins to ensure that its profitability
  increases(Team, 2012).

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References

• Gara, A. (2013 , April 8). Best Buy May Be the
  Next Home Depot (Update 2). Retrieved from Yahoo
  Finance http//finance.yahoo.com/news/best-buy-ma
  y-next-home-134700769.html
• Team, T. (2012, November 11). Best Buy's
  Earnings Still Facing Showrooming And Product
  Mix Challenges. Retrieved from Forbes
  http//www.forbes.com/sites/greatspeculations/2012
  /11/19/best-buys-earnings-still-facing-showrooming
  -and-product-mix-challenges/
• WINGFIELD, B. N. (2013,, FEBRUARY 27). More
  Retailers at Risk of Amazon Showrooming.
  Retrieved from New York Times http//bits.blogs.n
  ytimes.com/2013/02/27/more-retailers-at-risk-of-am
  azon-showrooming/?refbestbuycompany

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