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—,,—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 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 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, 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.


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