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Best Buy’s Walden: Preparing To Leap Into Cyberspace

One month after the creation of, the CE mega-chain’s online subsidiary, TWICE spoke with e-commerce president John C. Walden about the much-anticipated Web site relaunch and about life in the fast lane of e-tail.

TWICE: Why did you postpone the relaunch

Walden: There was no delay; that was a misperception. We never intended to have full service by the holiday season. If anything, we actually accelerated the launch by four months.

We want to put it up right and we want to put it up quickly. We’re building aggressively and hiring aggressively, and intend to put up a comprehensive site in early 2000.

TWICE: What’s been the biggest challenge?

Walden:Because we intend to be the market leader, the challenge is to quickly achieve a scalable shopping experience and the best shopping experience on the Web.

To accomplish that, you need the right fulfillment solutions. It’s easy to just stick merchandise in a warehouse and ship it. But there are distribution variables: how fast you’re selling the product, how big the product is, whether it’s available for direct ship, whether it requires integration with other products.

There’s no easy answer, no one-size-fits-all solution if you want to be most efficient, although it certainly helps that Best Buy has a world class inventory management system and understands the cost of carrying goods.

We already have the infrastructure and are very good at moving inventory all around the country. We already do home delivery and installation, both on our own and through third-party contractors. We’ll leverage all that, and might have some independent systems as well. The optimum solution may be a combination of national and local distribution and vendor fulfillment.

TWICE: Has vendor authorization been an issue?

Walden: We haven’t heard any vendor have any problem with their products on the Internet. It hasn’t been difficult, it’s just a lot of ground to cover. We’re working with thousands of vendors on extending our existing relationships to the Internet, and to get the order process down.

TWICE: Including Sony?

Walden: Yes.

TWICE: What features will the site offer?

Walden: Our goal is to give consumers choices, so we’ll provide a lot of product information. Whether that’s through help desks or phone lines or some other alternative, we’ll provide the help they need. But it’s still early; it’s all vapor right now.

TWICE: How many SKUs will the site carry?

Walden: For the initial launch, we’ll offer everything that’s in the stores. Eventually, we can conceivably offer every product in every category we carry — or categories we aren’t currently in — because we don’t have to inventory everything. We haven’t identified other categories at this point, because there’s enough breadth here to cover a lot of consumer hard goods without going outside of the current mix.

TWICE: What about pricing?

Walden: We should be able to keep prices comparable to what you see in the stores. That doesn’t mean that we won’t be aggressive in promotions if we have to, but I don’t think we’ll have to compete on price. We offer a lot more in terms of service and reputation.

TWICE: Will the site be integrated with the stores?

Walden: Yes. It’s a critical part of our strategy to be customer focused rather than channel focused. We have to look like one company, rather than three, and offer one shopping experience, regardless of the channel. If a customer wants to pick up a product in one channel and return it to another, we won’t say no.

It’s not necessarily a complicated technology solution. We have records of what’s ordered. As the Internet becomes more a part of the way the physical stores operate, we’ll need some standardization and additional training in the stores.

TWICE: Would that include in-store kiosks?

Walden: Kiosks are worthless. I don’t know what the plan is, but we will make the Internet available in stores, though not necessarily immediately.

TWICE: What about cannibalization?

Walden: Because we’re not channel focused, we don’t call it that. There are a lot of places we’ll touch people, and consumers might even use multiple channels for the same transaction.

We’ll definitely see some of the store business move to the Internet, but that would happen whether we take it or somebody else does. The Internet is not just a defensive strategy, however; it’s an opportunity to bring new customers in too.

TWICE: How much rope is Best Buy giving you?

Walden: I’m getting lots of leeway, but Best Buy is not your typical $12.5 billion company. It’s still run by entrepreneurs. They understand risk and understand what it takes to win.