Best Buy Scrambles Following Holiday Boondoggle
Best Buy (NYSE:BBY) is facing customer resentment as it failed to fulfill certain orders that customers placed during holiday season. It hasn’t disclosed exactly how many orders are affected. According to a company statement, the overwhelming demand for some products from Bestbuy.com, far greater than anticipated, led to this issue. However, Best Buy’s reputation has been affected and bruised customers have expressed their anger through various online portals including BestBuy forums. On Black Friday, Best Buy offered huge discounts to its customers and offered free online shipping in order to compete with online rival Amazon (NASDAQ:AMZN).
To mitigate the difficult brick and mortar retail environment, Best Buy has been working towards growing its share of the e-commerce market. It is rebuilding its internal IT team over the course of next 12 months and plans to hire approximately 200 IT professionals. It conducts online retail operations under a variety of brand names such as Best Buy, Best Buy Mobile, The Carphone Warehouse, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, PacificSales and The Phone House.
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This week, Best Buy completed this acquisition of mindShift for $167 million, which is now a 100% owned subsidiary of Best Buy. [1] mindSHIFT, a Massachusetts based managed service provider, provides cloud service, data center services and professional services to more than 5,400 U.S. clients. mindSHIFT will continue to be run by the same management team with no changes in its operations. We view it as a major development for Best Buy as this acquisition could bring in diverse revenue streams and possible synergies with the Best Buy Geek Squad.
The company also announced plans to close its stores in U.K. on January 15. Its first store was opened in April 2010. Presently it is offering a closing down sale, with 25-50% discounts on electrical goods. [2]
Last week, Best Buy issued an official statement regarding the online order cancellations. Best Buy’s public relations’ senior director Susan Busch considered this as a rare situation based on a high volume of orders over a short period of time. Affected customers have expressed their anger through various online portals including BestBuy forums. In order to compensate affected customers and to mend the damaged goodwill, Best Buy gave electronic gift cards to the affected customers. [3] We believe Best Buy has to be extra cautious in dealing with customers. These type of incidents could cost Best Buy severely especially in this digital age of cut-throat competition among the e-commerce companies.
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Notes:- See: Beyond Retail: Best Buy Completes mindSHIFT Acquisition, MSPmentor [↩]
- Best Buy UK ‘big box’ stores to close on January 15, Mobile News [↩]
- See: Best Buy issues statement regarding online order cancellations, Chain Store Age [↩]