ViewPoint.Orange » BestBuy

From BestBuy’s Withdrawal

Yuki Chow* — Thu, 17 Feb 2011 05:00:10 +0000

The famous US-based consumer electronics retailer Best Buy announced on February 22, 2011 that it had decided to stop running its nine stores in China. The surprise announcement effectively signaled the end of Best Buy’s eight-year China story in which it spent three years preparing for its market entry and five years expanding itself to nine stores located in Shanghai, Beijing, Suzhou and Hangzhou.

BestBuy is not the first one and definitely will not be the last one to pull out of China. Given the fact that China is strong in electronics and the native retailors are already taking a strong hold in that market, it wasn’t easy for BsetBuy to carve out a piece for itself.

Do you see it as a failure for Best Buy? In fact, Best Buy had failed to gain national influence since its entering Chinese market in 2006 because most of its retail stores were located in East China. There has been talk during the six years about its withdrawal. It has been said that Best Buy’s failure in China is based on its “famous”, “advanced” business model.

It has been well accepted that the Best Buy business model stands for a higher business civilization; nevertheless, a direct consequence of Best Buy model was that the retail store cost was too high, failing to provide a competitive price. It significantly reduced Best Buy’s competitive power in this way, especially in China.

When Best Buy entered China in 2005, the Chinese suppliers were not terrified at all; instead of it, they deeply expected it—the business model of Gome and Suning (Two Chinese biggest household appliance retailers) had had an ingrained vicious circle which was suffocating every supplier. Household appliance manufacturers expected a new model that could contend against the current model; in addition, the carrier must be strong enough—such as Best Buy, the biggest household appliance retailer in the world.

However, the result was disappointing. Best Buy suffered in deficit year by year and after six years, it ultimately came to an end.

Theoretically, the Best Buy “buy out” operation method and “spot trading” were supposed to be the best way to return to essence of retail and the most beneficial model for business ecological harmony. Included in their business model was to obtain the dominant right of the retail store by buying out the products and bear the depreciation loss; the employees of Best Buy are responsible for the sales promotions; making profit by scale purchases and purchase and sale price differentials. Compared to the badly condemned business model of Gome and Suning, Best Buy model stands for a higher business civilization with no doubt.

Do you see it as American morals fail to transcend Chinese consumer market?

Then what exactly is the Gome and Suning model? They enjoy a model that combined commission sale and distribute. They rent the sales area in the store to different household appliance manufacturers. Then they collect the rental fee and a certain percent of the manufacturers’ revenue. Even the sales promotion people are hired or appointed by the manufacturers. The tremendous fast expansion of Gome and Suning was based on collecting the store entrance fee from those manufacturers and returning money to them slowly.

It’s not hard to tell that one of the direct consequences of Best Buy model is the high storing cost—labor cost, advertising cost and other cost for a single store are much higher than one of Gome and Suning. This made Best Buy on one hand fail to provide a more competitive price to the consumers; on the other hand, due to the limited profit from every single store, the pace of Best Buy opening new stores was detrimentally slow—Gome and Suning have thousands of retail stores in China, and Best Buy only had nine. The sales revenue could not satisfy the U.S. headquarters, plus, it could hardly benefit Chinese customers and suppliers; as a result there was no way Best Buy could find a reason to stay in China.

What’s the lesson here?

Be flexible, even it means to change your business model.

Be adaptive, learn from the local business people.

Be innovative, or pull out of the competitive Chinese market.

Why you need a social media landing page – Key benefits and examples

Yuki Chow* — Wed, 03 Mar 2010 20:27:26 +0000

A social media landing page is a hub on the brand.com site that highlights all the social media platforms the brand is on. Similar to other landing pages, it’s a page tailored for a specific user group that is indexed by search engines. However, unlike landing pages for paid search or display banners, a social media landing page (SMLP) offers very different calls-to-action. They typically include the usual suspects such as engaging the brand, joining the community, and reaching out to other social platforms, which place more emphasize on social conversion instead of traditional sales conversion.

So what are the juicy benefits of SMLP?

Pulling segmented social channels together to increase awareness and exposure
Adding legitimacy to help differentiate the brand-owned pages & user generated pages
Sending more traffic to the brand website (Facebook Fan Page can be positioned as the “hub” if traffic is not a concern)
Allowing brands to track the number of social media visitors from various channels
Giving the tech-savvy social media users more context around the brand’s approach to social media and engagement policy
Enabling more creative display of the brand’s social media assets and content

With the key benefits in mind, a well designed SMLP can effectively integrate the brand’s social media assets into the corporate website. Below are some examples of brand’s SMLP with quick assessments-

What I like about it - Best Buy uses the tagline “Everyone’s talking” which truly reflects how the organization approaches social media. The landing page not only aggregates their Twelpforce, Forums, YouTube channel and Geek Squad Blog, it also puts Rating & Reviews in the forefront and encourages customers to express new ideas on IDEAX. The page follows a simple design with a primary goal of meeting user needs, two thumbs up on the layout and user experience.

What could be improved – To provide easier navigation from the home page; To ensure relevant social networks link back to this landing page! (e.g. the YouTube channel still links back to the home page)

What I like about it – AT&T pulls all of their social media presence together and divides them into 6 grids based on the target audiences. The SMLP has a permanent place under “About AT&T” which yields higher page rank. And the right-hand-side panel shows the latest 5 tweets from their Twitter handles.

What could be improved – More description for each user group to help people decide how to “continue the conversation.” Shorter disclaimer using user-friendly language, it’s for SOCIAL MEDIA visitors after all. Better visuals plus a stronger call-to-action than “Continue the conversation.”

What I like about it - Jeep tapped into the “dangerous” territory of social media, aka user-generated-content (UGC) and embraces those content on their brand website. The top right “Share” button enables user to contribute videos/photos to this SMLP via their personal YT or Flickr account. Additional groups and links at the footer allow Jeep owners to expand their connections and networks.

What could be improved – Less cluttered layout with bigger text font. Frequent attention from the webmaster to fix format compatibility and broken links and so on. (Since they’ve been calling up YouTube and Flickr APIs, those codes require constant maintenance.)

What I like about it – Microsoft demonstrates how it harnesses social media in a completely transparent and innovative way. Unlike other brand SMLPs, Microsoft actually positions this a social media hub where viewers can see what other customers are saying about Windows 7 in real-time. It pulls and displays content tagged with Windows 7 from various social networks, from Twitter, YouTube to blogger and their Facebook Fan Page, . In addition, although there is a manual moderation process in place, they do include the good soundbites as well as the the comments that don’t put Windows 7 in the best light. The About Page on the site did a good job explaining their moderation policy.

What could be improved – To allow users actually “Join the conversation” on site by leveraging Twitter API/Facebook Connect, etc. To share more insights around the extracting and curating feature with other 3rd party companies, so more brands can embrace the idea of a social media hub.

In conclusion, I think many companies need a social media landing page to integrate the offsite social media activities into their .com business. However, there isn’t a one-size fits all solution when it comes to design & functionalities, the page should be optimized based on the brand’s social media goals and their social media user base. So what is your POV on social media landing pages? Did you spot any other brand examples?