For Best Buy, online gift cards and ideas pay off

In a bid to increase web sales and improve the online shopper experience, Best Buy last year made two big changes to its web site: it enabled online redemption of gift cards and enhanced the site’s “gift idea center.” Best Buy recently conducted an analysis of how these changes affected online shopping during the 2005 holiday season. And it turns out its investment is paying off, company executives say.

In December, sales reached year-over-year growth of 40%; and according to preliminary numbers, online sales grew even faster in January, says Sam Taylor, senior vice president of online stores and marketing. “The redemption of gift cards online is the key driver,” he says
The chief request was receiving from shoppers was the wish to redeem gift certificates online. “We launched that in mid-2005,” Taylor says. “We really realized the benefit right after Christmas. In the first two weeks after the holiday, almost 40% of our online orders included gift card redemptions.”

Best Buy, No. 10 in the Internet Retailer Top 400 Guide to Retail Web Sites, also boosted the functionality of its holiday gift idea center. It increased the number of “gift by recipient” options, including ones in the areas of gifts for him, gifts for her, gifts for kids and gifts for teens. also broke out gift ideas by price ranges and product categories, and added a gift ideas section for small business owners seeking ideas for employee and client presents. “We made a lot of improvements and again the results paid off,” Taylor says. “We saw conversion rates two to three times higher for customers using the gift idea center vs. customers who did not.”, the ninth most visited e-retailer during the 2005 holiday season according to comScore Networks Inc., also decided to launch the holiday gift idea center earlier than it had in past. “Market research showed us that among certain segments of our customers, primarily women, many start Christmas shopping in October,” Taylor explains. “So for holiday 2005, we launched the gift idea center at the end of October, one month earlier than we did in 2004.”

The company, which develops new web site functions in-house, saw total sales of $7.3 billion in third quarter 2006, which ended Nov. 26, 2005. It realized earnings of $138 million. Taylor will speak at the Internet Retailer 2006 Conference & Exhibition in an educational session titled Delivering Web Content That’s Focused on Customer Needs.