Can Best Buy Online Power the Stock Despite Coronavirus?

March 11th, 2020 by Trefis Team
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BBY: Best Buy Co logo
BBY
Best Buy Co

Best Buy‘s (NYSE: BBY) e-commerce sales could likely grow from $6 billion in 2017 (fiscal 2018) to around $8.7 billion in 2020 (fiscal 2021). While the coronavirus outbreak is likely to dampen sales growth in the near term, the electronics retailer expects the impact on the supply chain to improve in the second half of the year. This also puts more importance on the company’s e-commerce business. E-commerce currently accounts for around 19% of Best Buy’s total revenue (in 2019), but the company has been emphasizing e-commerce growth going forward, in order to remain competitive in the Amazon dominated retail market. We expect this value to go up to 21% in 2020. Best Buy has been using its brick-and-mortar locations to fill e-commerce deliveries. It had been offering one-hour pickup in stores and complimentary next-day delivery on many products during the holiday shopping season.

We have created an interactive dashboard on Best Buy’s E-commerce Sales which provides a detailed analysis of how to arrive at this growth number.

We Expect Best Buy’s E-Commerce Sales To Contribute 21% To Its Total Revenues in 2020

The retailer’s online sales have increased from $4.8 billion in 2016 to around $7.6 billion in 2019, due to higher average order values, increased traffic, and higher conversion rates. We expect this figure to go up to $8.7 billion in 2020.

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Best Buy’s E-Commerce Sales Will Likely Represent Only Around 1% of the Total U.S. E-commerce Sales in 2020. While Amazon, its direct competitor in the electronics market, will likely generate 27% of the total U.S. online sales.

Best Buy’s Total Sales Will Also Represent Less Than 1% of the Total U.S. Retail Sales in 2020. While Walmart, which is the largest U.S. retailer, will have a 6% share in the total retail sales in 2020.

  • Total U.S. retail sales grew 8% from $5.1 trillion in 2017 to $5.5 trillion in 2019.
  • During this period, total e-commerce sales as a percentage of total sales grew from 9% in 2017 to 11% in 2019. This figure is expected to reach 12.3% in 2020, translating into $695 billion of U.S. e-commerce sales.

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