Best Buy just hit a revenue record, as the once-struggling electronics retailer continues to flourish thanks to a push to unite its in-store and online experiences.
In the last quarter, Best Buy reported $1.1 billion in U.S. online revenue, a company record for a non-holiday quarter, and a 31 percent increase over last year. This is the second time in a row Best Buy has achieved more than $1 billion in online revenue in a non-holiday quarter.
On the earnings call, Best Buy CEO Hubert Joly said digital will continue to be an investment priority for the company.
“So much of the customer experience has been starting online,” he said.” So what we’re seeing today is the continued effect of the cumulative investments we’ve made in simplifying and streamlining the customer experience. There’s a lot of details that you do to tweak and eliminate the frictions in log in, in checkout, every step in the journey.”
Best Buy shares rose in pre-market trading on news of the strong earnings report, but cautionary words from Joly that strong in-store sales did not represent a “new normal” reversed those gains and sent the stock tumbling.
Best Buy, like many of its fellow retailers, is dealing with a shift in how people shop, with online becoming the favored method over trips to the store. Many big-box retailers have closed swaths of stores thanks to this trend and competition from Amazon.
Best Buy has adapted to this threat by making its online and in-store experience complementary. Bala Subramanian, Best Buy chief digital officer, told GeekWire in an interview earlier this year that changing the way the company thought about e-commerce and embracing multi-channel retail have been key to its recovery.
“Rather than try to think about e-commerce and looking at stores as two separate things — which we as consumers don’t anymore — how do we actually start to use digital as tying those two together, so you can truly look at multi-channel retail? That’s one thing we are focused on,” he said.
And Best Buy has a secret weapon of sorts, something Amazon is working frantically to build: a massive distribution network in the form of its retail stores. Seventy percent of the U.S. population is within 15 minutes of a Best Buy store, Subramanian said, so when customers shop online they have several options to get what they need.
“So you can go and buy the product right away, maybe 15 minutes if you need it right away. You can get it shipped to you [from the nearest store], maybe in one or two days. Or you can get it a week from now,” he said.
This has helped the company’s stock quintuple in value over the last five years. At a low point in 2012, investors worried that showrooming, a trend where customers check out products in store, only to go buy them online somewhere else, would doom the electronics giant.
Best Buy’s Seattle office played an important role in the company’s online retail renaissance. Opened in 2015, the office employs about 85 people working on a variety of technology projects focused on bridging the gap between online and in-store shopping through the Best Buy and Geek Squad apps, as well as digital advertising initiatives and creating unique in-store experiences for app users.