Best Buy is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. In December 2011,...

 

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Best Buy is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. In December 2011, Best Buy issued a statement: "Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected fulfillment of some of our customers' online orders. We are very sorry for the inconvenience this has caused, and we have notified the affected customers." Best Buy's failure to manage its inventory was not only harmful to sales, it also weakened the consumer trust that is central to any retailer's success. With numerous articles about this issue in business journals, the negative publicity was overwhelming. According to Lee Resources Inc consultancy company, 91% of unhappy customers will not willingly do business with a company they had a bad experience with again. The nature of online business means that customers can move their business over to Amazon with the mere click of a button - which many did after this incident. Although Best Buy never released the details of what happened, it's clear that information mismatch is to blame for Best Buy's inability to deliver. Their solution of cancelling orders rather than delaying shipping seems to indicate that they oversold products that they didn't have in stock. Hello stockout! It's unlikely though that Best Buy would intentionally set out to disappoint their customers. However, the inability to deliver in the busiest season of the year directly plays into the narrative already on the minds of many consumers - that Best Buy could no longer adapt to market conditions, and that it was on its way down. The importance of a strong technological foundation cannot be overstated in the management of an online business. Question: With respect to inventory management, what are the lessons you learnt from this case study about BestBuy? Best Buy is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. In December 2011, Best Buy issued a statement: "Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected fulfillment of some of our customers' online orders. We are very sorry for the inconvenience this has caused, and we have notified the affected customers." Best Buy's failure to manage its inventory was not only harmful to sales, it also weakened the consumer trust that is central to any retailer's success. With numerous articles about this issue in business journals, the negative publicity was overwhelming. According to Lee Resources Inc consultancy company, 91% of unhappy customers will not willingly do business with a company they had a bad experience with again. The nature of online business means that customers can move their business over to Amazon with the mere click of a button - which many did after this incident. Although Best Buy never released the details of what happened, it's clear that information mismatch is to blame for Best Buy's inability to deliver. Their solution of cancelling orders rather than delaying shipping seems to indicate that they oversold products that they didn't have in stock. Hello stockout! It's unlikely though that Best Buy would intentionally set out to disappoint their customers. However, the inability to deliver in the busiest season of the year directly plays into the narrative already on the minds of many consumers - that Best Buy could no longer adapt to market conditions, and that it was on its way down. The importance of a strong technological foundation cannot be overstated in the management of an online business. Question: With respect to inventory management, what are the lessons you learnt from this case study about BestBuy?

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Based on the case study of Best Buys inventory management issue there are several lessons we can learn Accurate Demand Forecasting Best Buys failure t... View the full answer