Omnichannel still a work in progress at Best Buy

I wrote late last year about Best Buy’s “omnichannel” strategy, which centers on using its stores as mini-distribution centers for its Web site. The strategy is supposed to help it fight off Amazon, which has an inherent cost advantage (in part because Amazon can lose money at will, as it did in quarters 2 and 3 this past year, without being punished by the stock market). Instead, its sales, including online sales, fell by almost one percent (overall retail sales were up 3.8 percent) during the Christmas season.  From this we can say a few things:
A) Opening on Thanksgiving Day is a turkey of an idea;

B) Retail continues to be a feeding frenzy for buyers of commodity consumer electronics;
C) Strategies often work better in theory.
Best Buy is still in the process of rolling out its omnichannel strategy. Perhaps if it were fully implemented it would have helped the company’s sales during the Christmas season. My guess is Best Buy will push forward with omnichannel and try desperately to find a way out of the discount wars. Having 1,000 distribution centers gives it reach Amazon doesn’t have, but also costs Amazon doesn’t have. If Best Buy has to beat Amazon on pure cost, it won’t happen. At least, not until Wall Street starts demanding a better bottom line from Amazon.

A sidenote: For my story I interviewed Scott Durchslag, Best Buy’s president of e-commerce, who turned out to have been a year behind me at the University of Chicago, and had gone to the same high school as one of my roommates. It’s possible I met him; Durchslag and I had similar majors and took the same famous prof for at least one course, though in different years. But neither of us remembered having met.

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