Consumers Calling Best Buy the Grinch That Stole Christmas

Big-Box Retailer Cancels Some Online Orders, Saying It Ran Out of Merchandise

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It appears Best Buy could use a little Marketing 101: Don't promise what you can't deliver.

Credit: AP
The world's largest consumer-electronics retailer canceled some customers' online orders after it ran out of popular merchandise.

"Overwhelming demand of hot product offerings" on led to the cancellations, Lisa Hawks, a spokeswoman for the Richfield, Minn.-based retailer, said today in an email. She declined to identify the items or disclose the number of orders that won't be filled. It also isn't clear how long the company was aware of these problems before notifying affected customers. Drew Panayiotou, the company's senior VP-U.S. marketing, didn't immediately respond to a request for more clarity on the matter.

The canceled orders covered the weekend after Thanksgiving, when Best Buy stepped up discounts against Amazon and Walmart Stores. Best Buy promoted "aggressively online," leading to higher traffic and an increase in sales by stores open at least 14 months, CEO Brian Dunn told analysts on Dec. 13.

"I presume it's not particularly material, but the bad press is enough to scare some people away from ordering online at Best Buy in the future, so it's not positive," Michael Pachter, an analyst at Wedbush Securities in Los Angeles, said in an email.

The negative attention comes after Best Buy saw a steep profit decline in its third quarter, ended Nov. 26, despite increased web sales. Online revenue in the U.S. climbed 20% in the quarter, outpacing overall domestic comparable-store sales growth of 0.9%, the company said. But more discounting on products such as flat-panel TVs and mobile devices hurt profit in the third quarter, leading to a 29% decline in net income. The company's shares have tumbled 32% this year.

For a company that 's been at the forefront of using social media to engage customers -- and hailed for Twelpforce, its cohort of online service pros -- Best Buy's online reaction to the media firestorm has been surprisingly low-key. The company issued a statement of apology to select media outlets but as of Thursday evening hadn't acknowledged the problems on Twitter or Facebook, where some consumers began accusing the company of deleting posts. Chief Marketing Officer Barry Judge -- once held as a model for senior marketers looking to enhance their interaction with consumers online -- was also silent.

Best Buy's website lit up with complaints on community forums. One thread suggested alternative places for shoppers to buy their electronic gifts, citing B&H Foto & Electronics, based in New York City. Another was titled "I would like to thank Best Buy for killing Christmas." That same post derided it customer-service practices and referred to the company as the "Grinch."

Best Buy's not the only big-box retailer to face backlash this year after stumbling with online orders. In the fall, Target annoyed customers who were unable to complete online orders and in some cases couldn't access bridal or baby shower gift registries following a website overhaul.

--Bloomberg News

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