60% of Best Buy’s Q1 sales were picked up in store, curbside, shipped-from-store or delivered by a store employee. These store-fulfillment methods help power faster delivery.

Online sales pulled in 33.2% of Best Buy Co Inc’s. U.S. sales in its fiscal 2022 Q1 ended May 1, up roughly double the penetration from 15% of total sales two years ago in its fiscal 2020 Q1, the consumer electronics recently reported.

However, this penetration is a dip from 42.2% in Q1 of last year. This is likely because Best Buy’s physical stores were closed for weeks or months, not reopening until June 22, which pushed more of its shoppers online. U.S. online sales brought in $3.60 billion in the quarter, a 7.6% increase on a comparable basis.

“Clearly, the pandemic has accelerated the evolution of customer shopping behavior,” said CEO Corie Barry in an earnings call, according to a SeekingAlpha transcript.

Overall, comparable sales increased 37.2% year over year. Best Buy credits government stimulus programs and the strong housing environment, as well as market trends—including purchases on the home, cooking and remodeling—as benefitting Best Buy this quarter. The biggest contributors to the sales growth in Q1 were home theater, computing and appliances. Best Buy is No. 5 in the 2021 Digital Commerce 360 Top 1000.

Best Buy says its comparable sales growth highlights the strength of its supply chain during challenging times. “We were able to efficiently move the amount of inventory necessary to drive 37% comp sales growth while navigating record demand across retail, container shortages and port congestion,” Barry said.

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Shoppers picked up—either in store or curbside—about 44% of Best Buy’s online sales in its Q1, a similar penetration to last year’s Q1. But when factoring in these sales, plus online orders shipped-from-stores and delivered by a store employee, that accounted for 60% of its online revenue in Q1.

Rethinking stores for online fulfillment

These store-fulfillment methods are helping to power faster delivery, Best Buy says.

“We also improved our speed to customer, as our online sales package delivery was not only much faster than last year, it was faster than two years ago pre-pandemic. In fact, same-day delivery to customers’ homes was up 90% on a year-over-year basis,” Barry said.

Store employees delivering online orders began during the holiday season and is “becoming an increasingly important aspect of our delivery experience,” Barry said. The employees are trained and arrive in company-branded vehicles. Employees can choose to grab some deliveries during their shift, in lieu of their regular in-store tasks, Barry said.

Mass merchant Walmart Inc. (No. 2 in Top 1000) tried this fulfillment model in 2017, in which employees could deliver packages on the way home from their shifts. Walmart had high hopes for the last-mile test, which it conducted in New Jersey and Arkansas, using employees’ own vehicles. But it quietly ended the service less than a year later, as some workers didn’t feel like adding more tasks to an already taxing job, while others worried about having an accident in their own car.

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At Best Buy, liability for accidents won’t be the employees’ concern as they’ll drive company-owned vehicles. Also, customers are more accustomed to having Best Buy staffers show up at their doorstep, thanks to its existing home-installation and tech-repair services.

Best Buy is hoping to squeeze more than just fast delivery out of the fulfillment method, as employees won’t just drop off packages, chief operating officer Mike Mohan said in the earnings call with analysts. They might encourage the resident to sign up for the retailer’s new membership program, or even get one of Best Buy’s in-home sales consultants to drop by later to recommend a home-theater system or a new kitchen appliance.

Changes to store layout to accommodate online orders

Also to speed online fulfillment, Best Buy reoriented the locations of its in-store warehouse to be adjacent and closer to its curbside pickup

area and its BOPIS lockers. “Early results from this pilot show higher NPS and sales relative to its group of control stores,” Barry said without providing specifics.

It also is piloting new store formats in four Minneapolis locations, in which these stores have a reduced shopping square footage and more space dedicated to ship-from-store operations and staging products for in-store pickup. And while all Best Buy stores ship from stores, to make the process more efficient, Best Buy is working to consolidate ship-from-store orders to fewer stores and make these locations ship-from-store “hubs.”

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In its fiscal 2022 Q1 ended May 1, Best Buy reported:

  • $11.64 billion in revenue, a 37.2% increase compared with $8.56 billion in the year-ago period.
  • U.S. sales of $10.84 billion up 37.9% from $7.92 billion.
  • Net earnings of $596.0 million compared with $159 million.

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this article.

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