advertisement
advertisement

Best Buy’s 2-Year Site Rebuild: Will It Have A Target On Its Back?

Written by Frank Hayes
March 6th, 2013

Best Buy (NYSE:BBY), the poster child for showrooming, has just discovered that its E-Commerce sites have big problems. On a March 1 earnings call, CEO Hubert Joly said the chain’s multiple websites are unintegrated, effectively making multichannel retailing impossible. Best Buy’s solution: patching up the current sites with improvements that will start showing up in April and launching a completely new E-Commerce platform in “a couple of years.”

Joly didn’t mention that the website problems date from Best Buy’s long outsourcing arrangement with Accenture, which the retailer is quietly unwinding. But an all-new online platform that will take years to develop after a long period of outsourcing—what could go wrong with that plan? Oh, right—ask Target (NYSE:TGT).

On the earnings call, Joly made it a point to identify the E-Commerce site as a priority for the troubled chain—though without mentioning Amazon (NASDAQ:AMZN), which some retail analysts have suggested should rescue Best Buy just to use its stores as showrooms, because that’s what many see as Best Buy’s function anyway.

“We’re focused on growing online as well as expanding the profitability of online,” Joly said. “This deals with the interaction with the customers; it deals with search; it deals with assortments; it deals with integration. One of the surprises has been the fact that we have these multiple sites—BestBuy.com, MyRewardsZone.com, GeekSquad.com—that have not been integrated and so the customer experience, talking about multichannel even multi-websites, it was not integrated. We’re addressing that with the existing infrastructure.”

Those short-term fixes should all be in place by Black Friday, and they will include dynamically generated product recommendations, a new search engine, product pages that look consistent across the Web and mobile, seamless access to rewards programs, and easier ability for customers to extend warranties and add Geek Squad services.

Joly added, “In parallel to this, we will have a project to reconstruct, to redevelop, a new platform, and as you would expect, that takes longer. We expect this to probably take a couple of years, roughly speaking, which is why we don’t want to wait a couple of years and we’ll have this dual track.”

That sounds like a good plan on the surface, and neither Joly nor new CFO Sharon McCollam, who also oversees IT, offered up more detail on the multiyear new-platform product. But it’s troublingly similar to the plan that brought Target.com to its knees in 2011.

Remember? Target outsourced its E-Commerce operation to Amazon in 2002, then announced in 2009 it would end the deal and take Target.com back in-house starting in 2011. The new Amazon-less E-Commerce site launched on schedule in August 2011. Nothing worked quite right. Customers were irritated. Three weeks later, Target.com had its first big promotion, for products from fashion designer Missoni. The site collapsed.

Now consider Best Buy. In 2004, the chain hired Robert Willett away from Accenture to be its CIO. Six months later, Willett outsourced Best Buy’s IT function to the consulting firm—only 40 of the department’s 820 employees remained. Willett’s successor, Accenture veteran Neville Roberts, stuck with the program until he departed in 2011—shortly after which Best Buy began to rebuild its internal IT and, more quietly, to extract itself from the Accenture deal.

Two things about that deal jump out. The first is that Accenture essentially promised to eliminate Best Buy’s competitive advantage.


advertisement

Comments are closed.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.