Originally created 01/02/01

BestBuy clicks with buyers



Analysts already are writing off the 2000 holiday shopping season as one of the most dismal in a decade, but for Best Buy Co. Inc. there was at least one reason to cheer: BestBuy.com appears to be clicking with consumers.

BestBuy.com was the most visited consumer electronics destination in the five weeks ended Dec. 24, according to one study. Better yet, the site, which relaunched with great fanfare last June, was on track to exceed Best Buy's sales forecasts.

Sales at BestBuy.com totaled $25.5 million during the first three weeks of December and were expected to come in 10 percent above plan for the month, according to an e-mail sent to employees last week by John Walden, the unit's president. Since its relaunch, sales at BestBuy.com have totaled about $52 million.

A spokeswoman for Best Buy declined to comment on Walden's memo. Eden Prairie-based Best Buy is scheduled to release holiday figures on Jan. 4. But like most traditional retailers, including Target and Wal-Mart, Best Buy does not disclose sales on its Web site.

Walden included the sales figures in an e-mail sent to employees Dec. 22. "These accomplishments are dramatic, and I am personally very proud to be part of your team," he wrote.

To put BestBuy.com's performance in perspective, Best Buy's stores have average sales of $37.2 million per year, meaning the Web site is on pace in its first year to equal or top the sales of three stores.

But BestBuy.com probably will not turn a profit soon. Though Best Buy has not disclosed what it spent to relaunch its Web site, analysts estimate it to be in the tens of millions and rising. In contrast, a typical store costs $5 million to $10 million to open and stock. In addition, the Internet unit has about 350 mostly full-time employees, while the company's biggest stores employ about 150, more than half of whom work part-time.

BestBuy.com charges the same price for items as its stores do, and it taxes purchases. But in interviews this year, company executives said the site's mission was two-fold: to attract people who prefer to shop online or who can't shop at a Best Buy store, and to serve as a resource for people who still prefer to shop at a store.

Walden's e-mail suggests it's succeeding at both. An internally conducted study indicated that 20 percent of the people who made a purchase at a Best Buy store had visited BestBuy.com first. Clicks and mortar is working, he wrote.

Still, not everything went smoothly this holiday season. BestBuy.com crashed during the Thanksgiving weekend, in part because of a surge in traffic. An average of 344,000 people visited BestBuy.com daily in the week ending Nov. 26, making it the seventh most visited online retail site, according to Media Metrix, a New York City-based Web audience measurement firm.

BestBuy.com averaged 248,600 daily visitors in the five weeks ending Dec. 24. As was true with most online retailers, BestBuy.com's traffic tailed off in December. For the week ending Dec. 24 it had an average of 163,000 daily visitors. Still, that number was 140 percent higher than a year ago, and it was enough for Best Buy.com to rank 22nd among retail sites. Amazon.com was first, with 1.3 million visitors. Target.com, with 117,000 average daily visitors in the week before Christmas, did not rank among the top 25 retailers, according to Media Metrix.

Overall, online shopping appears to have been double what it was a year ago. While healthy, that is not as large an increase as in previous years.

According to data released Tuesday from investment bank Goldman Sachs and research firm PC Data, online spending between Nov. 1 and Dec. 17 totaled $8.7 billion, compared with $4.2 billion for the same period in 1999.

Eric Wieffering can be contacted at ewiefferingstartribune.com

(Distributed by Scripps Howard News Service, http:www.shns.com.)