"Wolf is coming," the industry began to exclaim before Best Buy entered the Chinese market. When Best Buy acquired the five-star electric appliance in 2006 and opened its first store in Xujiahui, the domestic appliance retailers were even more vocal. Domestic counterparts have no reason not to be nervous. As the world's largest home appliance retail giant, Best Buy's brands and joint-stock companies have an annual turnover of more than 50 billion US dollars, which is difficult for domestic retail companies to reach.
However, as time went by, the previous "Wolf is coming" voice disappeared, Best Buy did not reveal its fangs, did not pose a threat to the "US-Su", but instead struggled in China. In February 2011, Best Buy closed all its stores in China. This "wolf" died and died in internal and external troubles.
Advanced mode is not acceptable
Best Buy does not seem to be willing to withdraw from the Chinese market. In its February 26 announcement, it said "two of the nine stores that hope to be re-switched at the appropriate time this year." Are the two stores still insisting on the Best Buy brand? Is there still a business model for buyout operations? The reporter asked the person in charge of Best Buy public relations, but the other party's answer was only "will be announced at the right time." In the eyes of many people, Best Buy has been labeled as a failure.
"They (Best Buy) are definitely losing money, otherwise they will not close the store. Failure is doomed because their model is not suitable for the current Chinese market," the marketing manager of a home appliance store told reporters. Best Buy advocates a buyout business model, buys out the manufacturer's products at a lower price, and dominates the pricing power to earn a commodity price difference. Domestic appliance retailers mainly adopt agency sales and distribution methods to earn suppliers' entry fees and sales rebates.
When Best Buy entered China, it was the time when the zero-supply relationship between domestic appliance manufacturers and the stores was the most tense. The store was frequently overwhelmed by suppliers. The arrival of Best Buy has caused suppliers to see a glimmer of hope. “Best Buy is not only buying out business, not charging entry fees, but also implementing cash-strap mode. Unlike other stores, after we supply, the payment will be delayed for a long time. Just give it to us.†A Shanghai regional vice president of a domestic color TV manufacturer told reporters that this was very attractive to the suppliers at the time.
However, the expectations of suppliers for Best Buy gradually declined in the near future. “Because its number of stores is too small to support our shipments, we still have to rely on local stores, and they have also abandoned the cash spot model. ". According to the manufacturer, in the process of opening a new store, Best Buy gradually abandoned the mode of buyout business, and also charged the supplier for the entrance fee and advertising fee. "Gome Suning has a large number of stores, so this kind of The model can be successful. Best Buy does not have a few stores to charge the entrance fee, which makes us very unhappy."
For consumers, the first impression of Best Buy is that the service is good, but the price of the product is also expensive. “The most sensitive thing for domestic consumers is the price of the products. Some people pay attention to the service experience, but this part of the people is relatively small. So many people buy electricity first to go to Best Buy and then go to Gome to buy. Just like some people are trying to buy clothes at the mall and then go online to buy them,†said the marketing manager of the above appliance store.
Suppliers don't "pain", consumers don't "love", and Best Buy is heading for recession in this kind of external worry. “Best Buy's business model is not suitable for China's local development. It insists on its own things, but it does not capture the success of other stores. The number of stores must be scaled,†said Luo Qingqi, senior director of Palermo.
Inadequate management leads to civil strife
The business model is not convinced in China, which is the reason why Best Buy has generally failed. In the eyes of some Best Buy employees, poor internal management has also caused the international retail giant to ruin its future in the Chinese market.
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