This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.
Best Buy reported earnings for its fiscal Q4 2018 (ended February 3), which showed that the electronics retailer brought in $15.4 billion in revenue, up 9% year-over-year (YoY).
This marks an acceleration from the 4.2% YoY growth it managed in Q3, as the company found tremendous success over the holidays and throughout the quarter, especially online:
- Best Buy’s online business in the US continued to be a leading growth driver for the retailer, jumping 17.9% YoY to $2.8 billion. It now accounts for 20% of Best Buy’s total business, up from 18.6% in the comparable period a year earlier. The unit's YoY growth rate did decelerate for the second consecutive quarter, but CFO Corie Barry chalked this up to the nature of Q4 for Best Buy, given the huge number of sales that it makes online over the holidays. Looking back at recent years, Best Buy’s online sales growth does take a slight dip in Q4 before jumping back up, so Barry may be right to not worry.
- The company has plans to further bolster its online business, with a focus on improving conversion by bettering the customer experience. Conversion has been a key driver for Best Buy according to Barry, as opposed to just driving traffic, and to continue that, the retailer wants to improve its search capabilities. By improving its search with natural language processing (NLP), for instance, consumers will have an easier time finding their desired products and completing purchases, Barry said. That should allow Best Buy to capitalize on the consumers that shop with it online.
CEO Hubert Joly also pointed to Best Buy's store associates and support offerings as a key factor in its success, and the company has plans to expand its support value this year. The CEO believes that Best Buy’s store associates hold a great deal of value, as they have personal interactions with consumers and help them find solutions. Solving problems and helping consumers is something Best Buy’s Geek Squad specializes in, which is likely why Best Buy plans on expanding its Total Tech Support program nationwide in 2018.
The program sees Best Buy help consumers with technology no matter where they bought it from. Best Buy seems to see its support offerings as a value to customers that can be utilized separately from its product sales, which could potentially lead to an important new revenue stream.
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to:
|
Content like this delivered straight to your inbox daily |
|
|
Access to 250+ expertly researched reports plus all future reports |
|
|
Forecasts of new and emerging technologies in your industry |
|
|
And more! |