As many of you guys aware, BestBuy is the dominating player among retailers (Circuity City, Frys, and Richard & Sons). I believe that it was able to support its market share from two major value drivers which are very obvious - quality control and customer service.
Quality control - In this segment, the company is evaluated by i) quality of product, ii) delivery time of product. Since BestBuy doesn't make a product in-house, the delivery time is evaluted when there is any 'returned item', i.e. how long does it take to provide a replacement for the customer who are having an issue. As matter of fact, I think that BestBuy's responding delivery time is not promising. This measure is done by gathering the ratio of returning customers, but it seems that one-time is enough for BestBuy shoppers.
Customer service - The level of complaints that I faced is getting closer to the level of Circuit City before going under. Customers are not satisfied with its service at all, but the company is focusing on expanding its potential growth rather than taking care of its current customer base. The trust between customer and company is very fragile in this competitive market. One bad experience will shut the future sale on company side.
In addition, its promotions are unattractive compared to other companies. 5% or 10% discount is not a strong marketing tool in this market.
Review section is not provided by BestBuy, so customers are having trouble selecting an item.
On its website, the shipping information states: "Usually leaves our warehouse in 1 business day". This is another issue as it doesn't provide any delivery time for customers.
Another concern is their aggressive expansion plan in 2008. While we are expecting that the economy won't look promising in near future, I think the company made a wrong move expecting that it would turn around in late 2008. In addition, the average spending in electronic devices show less growth trend and I expect that this will be a major negative impact on BestBuy.
With all other competitors entering this market (Walmart, Costco), BestBuy may not be able to sustain its margin level using warranty package trick.
$40.64 (09/18/08)
