Online accounted for all the U.S. sales gains for Best Buy Co. Inc. in the fourth quarter as shoppers engaged more heavily with the retailer’s mobile app and took advantage of enhanced delivery and pickup options.
CEO Corie Barry today promised more enhancements in the year ahead in the mobile app and in the retailer’s buy online, pick up in store services.
During the fiscal fourth quarter ended Feb. 1, Best Buy’s domestic online sales increased 18.7% and accounted for 25.4% of total U.S. sales, up from 21.9% of U.S. sales in Q4 of the prior fiscal year. Meanwhile, total domestic revenue increased 2.6% to $13.848 billion from $13.497 billion in the year-ago quarter.
That means online revenue increased by about $561 million to about $3.52 billion in Q4 from $2.96 billion. That further suggests store sales decreased approximately $211 million, a 2.0% decrease year over year. Best Buy is No. 13 in the 2019 Digital Commerce 360 Top 1000, which ranks North America’s leading retailers by online sales.
Customers picked up 42% of online orders in stores during the fourth quarter, up more than 5 percentage points from the prior-year quarter, Barry said. She noted that Best Buy offered online shoppers greater convenience during the holiday period, promising that online orders would be available for pickup within 1 hour and offering free next-day delivery to consumers’ homes of “thousands of items” to 99% of U.S. customers.
Barry said the retailer has introduced the option of picking up online orders at 2,000 alternate locations besides its stores in nine markets, without naming them. She said Best Buy plans to expand that service to more metropolitan areas in the current year, but did not provide details. The retailer introduced non-store pickup locations in areas where in-store pickup is not feasible and many customers prefer delivery to a location other than their homes, Barry said.
She also noted that Best Buy began offering curbside pickup of web orders at 100 stores and that curbside represented 15% of in-store pickups at those locations. She said that delivery-to-car service will be expanded to most Best Buy stores this year.
Shoppers flock to Best Buy’s mobile app
Barry also emphasized the growing adoption of Best Buy’s mobile app. She said app usage increased 22% overall and by 17% within Best Buy stores during the past year. She said customer engagement is eight times greater for customers who use the app versus those who buy only on the retailer’s web or mobile sites.
In the year ahead, she said Best Buy will enhance its app to offer more information about local product availability and pickup options. It also will allow customers to use the primary Best Buy app to schedule in-home appointments for Best Buy’s Total Tech Support service, which installs and repairs electronics products. Currently, shoppers must download a separate app to schedule those appointments, Barry said.
Total Tech Support charges $199.99 for a variety of in-home services. Barry said membership now totals nearly 2.3 million consumers, and that those members engage with the service on average 2.5 times per year. “Members spend more and are twice as likely to use other services than non-members,” Barry said, without providing details.
She also said Best Buy stores would add electronic shelf labels, after a successful test in 200 stores. Those electronic displays enable bricks-and-mortar retailers to change prices rapidly, which can enable them to better compete with online retailers. Barry also said more Best Buy stores will be renovated to offer expanded fulfillment services.
For the fiscal fourth quarter ended Feb. 1, Best Buy reported:
- Total domestic revenue of $13.848 billion, an increase of 2.6% over $13.497 billion in the same quarter a year earlier.
- Domestic online sales increased 18.7% and accounted for 25.4% of U.S. sales versus 21.9% a year earlier. That suggests online sales in the U.S. grew to $3.52 billion from $2.96 billion.
- Total revenue increased 2.7% to $15.196 billion from $14.801 billion.
- International revenue accounted for 8.4% of sales, growing 3.4% to $1.348 billion from $1.304 billion. Best Buy did not report ecommerce revenue for its international segment.
- Net earnings of $745 million, an increase of 1.4% from $735 million.
For its 2020 fiscal year ended Feb. 1, 2020, Best Buy reported:
- Total revenue of $43.638 billion, up 1.7% from $42.879 billion in fiscal year 2019.
- U.S. revenue of $40.114 billion, an increase of 2.1% from $39.304 billion. Ecommerce represented about 20% of domestic revenue.
- International revenue of $3.524 billion, a decrease of 1.4% from $3.575 billion. The company did not report the percentage of international sales from ecommerce.
- Net earnings of $1.541 billion, up 5.3% from $1.464 billion.