Best Buy fighting back
I had a great experience at Best Buy today, and one that provides some insight on how they might chart a path through the disruption in the market (mostly from Amazon, but others too) that is an existential threat.
On the surface, it was not a remarkable experience, or maybe shouldn’t have been. I bought a product there over the Summer and bought the Best Buy “Protection Plan” replacement program. The cost was modest: $19.99 for two years replacement coverage on a $129 device. The device broke a few days ago, so I took it in to get replaced. It was an effortless experience - would have been in and out of the store in 5 minutes with brand new in the box product and only out $2 and change to extend the warranty. I delayed myself by looking around and buying a few other things I needed, but more on that later.
The device is/ was a Jawbone UP band activity tracker. I’m a huge fan of the product and the company. However, there are definitely manufacturing problems with the UP: this was the fifth I’ve had fail in a little under a year. The Jawbone replacement program is not great - they’re slow to get you the new band, or at least slow by today’s Amazon/ Zappo’s standards that we’ve all become accustomed to. It’s not a bargain basement product at that has been the one part of the customer experience that’s felt a bit that way.
So… after my fourth UP band failed this Summer, and I increasingly have been more and more gentle with it (no using in the shower, no charging for more than 80 minutes, charge only in a computer USB port not in a wall…), I noticed that my friend Jeff Pulver had a backup band (a “back UP UP”?) which seemed like a great idea. Given the failure rate of the product, it seemed like a natural thing to get at Best Buy if I could. It was available, with the coverage, so I picked it up in mid-August.
Three and a half months later it failed… wouldn’t sync/ wouldn’t charge/ wouldn’t reset. I switched to my backup and waited to get back from Thanksgiving to take it in, though I could have gone to any Best Buy anywhere which is a big selling point also. I was curious to see what would happen at the store. I wasn’t sure what I would get — would they need to evaluate it, try something, send it in?
At the store they ask to see your receipt, which includes showing them the email that they sent you with the receipt info. If you don’t have that they can look it up by Credit Card (they were doing this in parallel to me searching my Evernote for the email). Once he saw that, he asked me to go get a new one off the shelf. At this point, I was feeling pretty good. To keep the warranty process going, they pro-rate the existing amount you’ve paid and then you can buy another policy on the new product. That was my out of pocket two dollars and change.
This is an interesting strategy for Best Buy, in line with their alignment with cool new products like activity trackers, the Leap Motion controller, Pebble SmartWatch, in addition to tablets and eReaders. A low-cost extension to the manufacturer’s warranty that gives you access to multiple local in-person replacement shops is a great offer. I’m not sure what their deal is with these companies - depending on the product it could be expensive (I would want pretty good terms on the UP band).
The big plus of course is that they get you in the store. They got me in the store, and I picked up about $200 of other electronics that I needed (routers and switches to reconfigure my home network a bit). All things I could have bought online at Apple or Amazon for the same price, and probably would have.
Best Buy has a big asset which is these big stores. The compelling question is how valuable can they make those? Having cool new products like LeapMotion and Pebble that you really need to come see and touch is a big step in the right direction. Helping make sense of complex electronics with the Geek Squad is another — kind of an Apple Genius Bar for not just for Apple. The Protection Plans are a third.
From a Lean Startup way of thinking, each of these are good experiments to help them learn what is going to be interesting and valuable to people coming into the store. I doubt they have to pay huge amounts to startups to get their products in stores even on a somewhat exclusive basis (the payments could just as easily be coming to Best Buy). Geek Squad is a natural add on, and the most they could be out on the Protection Policies is very knowable based on sales — and as with the product placement, I have to believe that the companies participate in those replacement costs.
I still worry about the future of big box stores like Best Buy — if Amazon takes over the Post Office or subway ticket offices as in London they could replicate these features very quickly, or leapfrog them by delivering my replacement UP band and return packaging by drone within 30 minutes. In the meantime, go to Best Buy.