Consumer electronics retail chain Best Buy Co. Inc. reported domestic online revenue of $4.85 billion in its fiscal Q2 ended Aug. 1—a company record for ecommerce revenue in a quarter. The nearly $5 billion in digital sales surpasses the company’s previous record-high by almost 40%.
Best Buy’s ecommerce sales increased 242% in Q2 primarily because of higher conversion rates and increased site traffic, the company says. Domestic online revenue accounted for 53% of domestic total revenue, up considerably from 16% over the same period last year. Ecommerce represented 42% of sales during its fiscal Q1 ended May 4.
Due to statewide store closures as a result of the coronavirus pandemic, Best Buy’s stores were closed during the majority of Q1. Prior to reopening, Best Buy was able to retain 92% of last year’s revenue at the start of Q2 thanks to its ecommerce sales. Online sales remain strong even after all of its stores reopened June 22 (mid-Q2), the company says. Ecommerce revenue grew approximately 180% during the last seven weeks of Q2 year over year. And in Q3, domestic online sales are up nearly 175% for the first three weeks of August, Best Buy says.
For the first six months of its fiscal year, Best Buy’s online sales grew 200% compared with 2019.
Omnichannel services—buy online pick up in store and curbside pickup in particular—represented 41% of digital sales in the second quarter. Best Buy plans to enhance its curbside pickup experience by adding functionality that will let customers know about high and low traffic times, particularly when they are in the parking lot waiting for curbside pickup orders.
“We will continue to add features and capabilities to the app to drive frequency, retention and personalization opportunities, all of which are significantly higher in the app than other digital channels,” said CEO Corie Barry on a call discussing the results, according to a SeekingAlpha transcript.
Best Buy isn’t alone in relying on curbside pickup as a channel to get customers products during the pandemic. As of August 2020, 43.7% of the 245 retailers with stores ranked in the Digital Commerce 360 Top 500 offer curbside pickup, a sharp increase from 6.9% at the end of 2019.
As a result of changing consumer behavior, Best Buy is evolving other ways it uses stores for fulfillment in addition to curbside pickup and BOPIS. In September, for example, the company will pilot a ship-from-store model to handle significant volume pre-holiday and year-round. All stores will continue to ship out online orders, but approximately 250 locations will be able to ship out “significantly more volume,” Barry said on the call.
Additionally, the company is using local data to determine such things as which stores to prepare for high volume ship-from-store capabilities and which stores to open an hour earlier for appointments or consultations.
Other digital initiatives the company is pursuing include augmented reality in its app and site. With AR, consumers can use their smartphone camera and view to-scale images of a product to see how it would look within their home.
And in stores, Best Buy is piloting self-service, in-aisle checkout for selected SKUs, Barry said, without providing more details. “This will allow a checkout process that is fast, convenient and involves minimal contact for customers,” Barry said.
For the fiscal Q2 ended Aug. 1, Best Buy also reports:
- Total revenue of $9.91 billion, up 3.9% from $9.54 billion in Q2 2019.
- Domestic total revenue of $9.13 billion, up 3.5% from $8.82 billion.
- Net earnings of $432.0 million, up from $238.0 million.
For the first six months of its fiscal year, Best Buy reports:
- Total revenue of $18.47 billion, down 1.1% from $18.68 billion in the same period of 2019.
- Domestic total revenue of $17.04 billion, down 1.5% from $17.30 billion.
- Net earnings of $591 million, up from $503 million.
Best Buy is No. 10 in the Digital Commerce 360 Top 1000.
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