Dive Brief:
- Best Buy leaned less on its store fleet and more on its distribution centers in the third quarter to ship orders directly to customers, CEO Corie Barry said on a Nov. 21 earnings call.
- "We had the lowest ship-from-store volume as a percent of total since well before the pandemic, with approximately 62% of e-commerce small packages delivered to customers from automated distribution centers," Barry said.
- By reducing the shipping volume load at the majority of its stores, Best Buy employees can focus on customer-facing services like in-store sales and order pickups, she said.
Dive Insight:
Best Buy continues to adjust its brick-and-mortar operations in the age of omnichannel shopping, aiming to strike the best balance of in-store service and e-commerce fulfillment capabilities. Its revenue fell 7.8% in Q3 amid weak demand for electronics.
Although the retailer has reduced its share of orders shipped from stores, it still needs "less selling square footage and more fulfillment and inventory holding space," Barry said. Nearly one-third of Best Buy's U.S. sales are tied to online orders, and 43% of those sales involve the customer picking up the order at a store, she added.
Employee flexibility will be crucial as Best Buy responds to demand shifts. When there's an uptick in ship-from-store orders or in-store pickups, Best Buy can quickly "shift some of that labor into those areas," Barry said.
The company's distribution centers are also evolving to attract more sales by housing virtual stores, which are staffed with employees to provide guidance to customers on their online shopping journey.
"This quarter, we had 140,000 customer interactions by a video chat with associates, specifically out of our virtual store locations," Barry said.
While Best Buy is leaning less on its stores to ship customer orders, other retailers are ramping up their ship-from-store capabilities. Ulta Beauty expanded its ship-from-store locations to 276 additional stores earlier this year, and Walmart's surge in store-fulfilled delivery sales has coincided with investments the company has made in that area.
