Analyzing Customers, Best Buy Decides Not All Are Welcome

Wall Street Journal Online ^ | November 8, 2004 | GARY MCWILLIAMS

[PoliticalInsider]

Brad Anderson, chief executive officer of Best Buy Co., is embracing a heretical notion for a retailer. He wants to separate the "angels" among his 1.5 million daily customers from the "devils."

Best Buy's angels are customers who boost profits at the consumer-electronics giant by snapping up high-definition televisions, portable electronics, and newly released DVDs without waiting for markdowns or rebates.

The devils are its worst customers. They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts. They load up on "loss leaders," severely discounted merchandise designed to boost store traffic, then flip the goods at a profit on eBay. They slap down rock-bottom price quotes from Web sites and demand that Best Buy make good on its lowest-price pledge. "They can wreak enormous economic havoc," says Mr. Anderson.

Best Buy estimates that as many as 100 million of its 500 million customer visits each year are undesirable. And the 54-year-old chief executive wants to be rid of these customers.

Mr. Anderson's new approach upends what has long been standard practice for mass merchants. Most chains use their marketing budgets chiefly to maximize customer traffic, in the belief that more visitors will lift revenue and profit. Shunning customers -- unprofitable or not -- is rare and risky.

[Tribune7]

You've never bought anything and found it was inadequate for your needs?

There's nothing wrong with returning things. What I object to is buying things then applying for rebates, returning the purchases and buying them back at returned-merchandise discounts.

[SGCOS]

[Chad Fairbanks]

Exactly. I wouldn't want those types of customers, either. In fact, if I ran a store, those types of customers would be flagged by my Loss Prevention Dept. and tosed the hell out.

[Bob J]

It's BB's discount pricing and loss leaders that are bringing in the losers. Stop the product promotions and they'll stay away. Of course, they'll lose 50% of their sales as the competitors zero in and take advantage. When you get to BB's size, market share is everything.

Although I understand his frustration, this whole approach is plain dumb.

[ez2muz]

I avoid BestBuy with a passion.

Acres of store; 10 check-out stations; 1 person working; 12 people in line.

Repeatedly.

[TXBSAFH]

Heaven forbid we be smart informed consumers.

[TXBSAFH]

Heaven forbid we be smart informed consumers.

[Tribune7]

I wonder, though, if I'm a "devil" ...

Never :-)

Anyway, I don't think that's what the Best Buy people are complaining about.

[pepperdog]

"Anyone who thinks that they can manage their customers rather than serve them is about to take a downhill ride."

That should be on a poster in every break room of every commercial business selling to the general public in this country!

[You Dirty Rats]

Classic example -- I was ready to buy a TiVo with 80 Hours storage. The guy told me it was a waste of money, because nobody uses 80 hours. So I listened to him. Problem is, it's 40 hours only on low quality. On high quality, like sports events, is doesn't last that long. Now my wife is upset because of all of the 30 Minute Meals I keep saving that block room for Dr. Phil. Hey, I need my daily Rachael Ray fix! Her meals aren't too bad, either.

[Prime Choice]

Yeah, that's dishonest 100%. It's not a question of "inadequate for your needs" or "defective". It's people scamming.

I don't dispute that. What I do dispute is how Mr. Anderson of Best Buy lumps those consumers who send in for their rebates with those unethical people. That should p!ss off any consumer.

[HungarianGypsy]

Circuit City is usually known for doing that. All electronic stores have their problems. A friend of mine was having a problem and swore he wasn't going to go there again after many floor people said they couldn't help with his problem. He ended up getting a call from someone higher up who was a big help. They managed to keep a good customer that way.

[Buggman]

Actually, the devil there is Teletech, which handles both Verizon's and Nextel's customer service (last I checked for Verizon, anyway).

[freecopper01]

I don't think the issue is you buying products that are marked down, but rather, that you purchase items in bulk and return them to get them in the RETURNED/MARK DOWN category.... MMMMM Kinda like a guy telling a girl hewants to see if she's capatible with him in bed and then droping her and complaining that she's easy so his friends won't date her. Gets the guy what he wants without any price....

[orangelobster]

Yeah, I think it is just a poorly written article. Surf on a few electronic gadget web forums and you'll see hordes of geeks coming up with bizarre schemes involving returning perfectly good items.

I think the best buy people are referring to the few people that are abusing the return policies, which drives up the prices for everyone.

[the_Watchman]

I would agree with everything you said except the first point. It is unethical to purchase a product with the intent of returning it. Stores usually stop this nonsense by charging a "restocking fee".

I just purchased a laptop at Circuit City. They gave us two weeks to return the laptop with no penalty unless the package was open. (This policy fit our needs since it was intended as a gift where it was not assured that the recipient would want it.) If the package was opened, then we would be charged a restocking fee.

[TontoKowalski]

I think you're misreading the article. Here's the salient point, IMO:

They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts.

No way around it, this is just unethical. I think the store has a point, in this case.

The stuff about people selling thier sale items on EBay or stores not wanting to honor their best-price guarantee is just hogwash.

[TommyDale]

It sounds like they discovered Fatwallet.com is costing them money (read: profits from overcharging some customers).

[Tribune7]

And it could screw things up for everyone if it gets out of hand. I don't want to pay a stocking fee if I return something.

[SlowBoat407]

I have a list of complaints about Best Buy and their return policy for legitimate complaints, their installation service, and their floor help. I'm never going back there. They can have the devils.