There's no more interesting or complex retail environment than consumer electronics. The market is exploding -- with more products, choices and options than ever before. Today, everyone from the computer geek to your grandmother is installing (or upgrading) their home network, their smart phone, their flatscreen, their laptop and desktop computer.
And Best Buy, having outlived its main retail competitor Circuit City, should be ruling the world. And yet they're in a tailspin. Their CEO has been fired for some sort of illicit office romance, and the founder is now back, looking to take the company private and fix it before it crashes forever.
Three times in the past two weeks I've made my way to Best Buy. I've kicked the tires, looked at options and then, often disappointed, ended up online at Amazon ordering something that BB either didn't have or that couldn't be found on their website. It wasn't about price. I wanted information, knowledge, data and clarity around which product best served my needs. Amazon's user reviews, as messy as they are, gave me more information than the Best Buy 'blue shirt' who seemed to know that they were fighting a losing battle. But it doesn't have to be that way.
Well, as a customer (or someone who tries to be) I've decided it's time to share what I think may be the only winning strategy for the big box retailer.
Here's six things Richard Schulze must do to save Best Buy.
1. Embrace Showrooming.
People want to see what they're buying. They want to see how it looks, hear how it sounds, explore the experience of the product before they buy it. Today, Best Buy only puts on the showroom floor products it can stock in volume so users can walk out the door with it. But that model is broken. Consumers want deep choice -- and Amazon is able to run circles around BB with a mix of warehouses and direct-from-manufacturer sales. Often on Amazon you don't know whose stock you're buying from until you check out. But the massive selection and crowd-sourced knowledge makes BB look like a thinly stocked and slow moving competitor.
They need to flip the model upside down. Sure, stock some of the most popular 'need it now' items. But for everything else, embrace showrooming and invite customers to come, learn, kick the tires and then buy and ship online. Heck, even use the terminal in the store to place the online order.
This means change the role of the Blue Shirt.
2. Commission Salespeople.
Best Buy prides itself on having salespeople that aren't paid on commission. They say it takes out the hard sell. That may be true -- but it also makes it impossible to have a Blue Shirt direct customers to the wider selection that the website provides.
It's time to turn the model upside down.
Instead, you should be able to go in and learn from the thing that BB has that Amazon doesn't, real human product experts. Then, with their Blue Shirt Team Member #, customers should be able to go online, and put in that number -- and get a DISCOUNT for having worked with an expert. This expert should be able to respond to texts or tweets, help with product issues, and make it worth it to buy from BB's knowledgeable team with the speed and flexibility of online ordering and delivery and the resources of a skilled team.
3. Turn Sales People Into Compensated Consultants and Experts.
Today when you walk in to BB, you can feel that the teams know that the more they share with you, the more likely you are to go online and buy from a competitor. And even if you buy from their website, they're not going to get the credit. But selling consumer electronics can be fun, and profitable, if you incentivize the people that have deep product knowledge to share that knowledge with customers. Today it's just a waste of time. But people who are walking into BB want to learn, be guided and leave with a product recommendation that solves their problem. They want more than Amazon's user reviews. They want access to an expert. And they'll pay for it -- and for the right to get advice and support.
4. Out Amazon Amazon.
Amazon has three things that are turning retail on its head. 1). Massive, almost unlimited stock. 2). A community of active customers who rate, rank and review products 3). A business model that has very low overhead.
And for some customers low cost and no customer service is a winning formula.
But for lots of us, our time is a scarce commodity. So having to buy a WiFi router or some other gizmo and then install it, trouble shoot it and return it before getting it right is a costly self-serve model. Because Amazon takes no less than two days of shipping even with "Prime," walking into a Best Buy and getting good advice about a product and then having it shipped with the Blue Shirt earning a commission results in the same speed of delivery but a much lower likelihood of a return.
Don't get me wrong -- Best Buy's website needs to match Amazon feature for feature. Reviews, sorting, ranking, 'in stock' notices, video reviews and more. Currently, it's not close. But if I could get a human advisor -- and know that they'd support me after the sale -- my decision to buy from Amazon would be much harder. Often, it's an easy question or a bit of advice. Best Buy already has the Geek Squad, but I've never used them and wouldn't know how to even plug into that knowledge. Instead, I want my formerly unmotivated sales person to become a rock star product evangelist. If you're worried about the history of the 'hard sell' then don't allow the evil 'sales spiff' that paid salespeople a bonus to move a manufacturers soon-to-be-outdated gizmo.
Oh, one more thing. Best Buy should give up trying to soak consumers on cables and peripherals. The days of the $68 HDMI cable are over. Anyone who searches Amazon for two minutes sees the prices on cables and adapters is now rock bottom, and paying a premium for those must-have items just leaves a bad taste in the customer's mouth.
5. Replace physical stock with agile support and returns.
When Amazon purchased Zappos they endorsed a new way to serve customers online. Don't look to cut out customer interaction. Instead, Zappos CEO Tony Hsieh has taught the industry that engaging and supporting customers makes good business sense. Yet Amazon hasn't adopted the Zappos model across its other verticals. Best Buy could get there first. People are learning that they can buy three pairs of shoes and return the two that don't fit with no penalty. If you read the comments on Amazon, folks are starting to do the same thing with consumer electronics. Try out three kinds of 'soundbar' speakers for your flatscreen -- and return two. BB would do well to figure out the economics of the try and return ecosystem because its only going to grow.
6. Serve the customer who's not an uber geek.
Sure, there's always a price sensitive uber-geek who will spend an hour online to save five dollars. But most consumer electronics customers want expertise, sales support product knowledge and the confidence to say I bought the right thing for me. In a world of infinite choice, slogging through hundreds of consumer reviews with four or five stars just doesn't make for a happy consumer. Instead, being told that this product will work in your setup, is well reviewed, easy to install and can be ordered and shipped to you in a few days is an experience that customers are hungry for.
In conclusion, 'showrooming,' the idea that people will come to your store and then go and buy a product online, is a reality that is here to stay. But why do they have to buy from a competitor online? Why not buy from YOU online? With a motivated and compensated sales force and a deep online sales inventory Best Buy could put up a fight that would give Amazon a run for its money.
And hey Barnes and Noble -- same thing goes for you.