Tuesday, October 5, 2010

Best Buy Wants to Become Top EV Seller; Educating Customers is Key

By Steve Puma      August 9th, 2010    8 Comments
Best Buy is now selling the Brammo EnertiaWhen it comes to innovation, Best Buy continues to surprise me with with just how far ahead they are of every other big-box retailer. For example, they are currently the leading retailers of electric bikes and scooters, and have recently added Brammo motorcycles to the mix.
However, Best Buy's long-term strategy includes much, much, more than adding a few two-wheeled EVs to their huge selection of computer, electronics and appliance products. As I learned from Chad Bell,  Best Buy's director of emerging business,  the company believes that, by educating its customers about electric vehicles, it can become a preferred destination for them to purchase EVs of all kinds, up to and including highway-capable cars that one might normally expect to purchase at an auto dealership.
Through Geek Squad, the company provides repair and maintenance of the EVs it sells, and  is beginning to provide services related to EV charging stations.

Best Buy sponsored electric motorcycle
At the recent Plug-In 2010 International Conference and Exposition, Mr. Bell represented Best Buy in a panel session called: "Innovative Business Models in the Electric Vehicle Industry", which also featured representatives from electric motorcycle startup Mission Motors, and EV infrastructure startup Better Place.
Mr. Bell explained that, as Best Buy has grown, so has its ability to impact the communities it serves. Its large number of retail stores, with their high access to consumers, gives the company its significant reach.
At the same time, he related, "Transportation is experiencing a paradigm shift on a global scale, as the industry move towards a more sustainable power model, and a behavioral change to customized solutions." Electric Vehicles are a good fit for Best Buy, for a number of reasons, one of those being that they have a lot in common with many of their other products, “Electric cars are basically computers on wheels."

Best Buy now selling electric vehicles.

Mr. Bell noted that Best Buy was already well-positioned to become an early EV leader. In a December, 2009 poll, 240 people where asked, "Where would you think to buy an electric vehicle or scooter?." The leader, by far, was Best Buy (7%), outpacing Amazon.com (3%), and, surprisingly, beating out motorcycle dealerships (3%), bicycle shops (3%), and even Wal-Mart (1%).
However, since EVs are a completely new market, one that customers are unfamiliar with, this emerging business model will only drive long-term value for Best Buy if the company can successfully communicate the benefits of sustainable transportation to its customers. The best way to do this, is through education. "Our mission is to take a leadership position in alternative transportation by educating the customers about better ways to get around."
Like any smart car salesman, Best Buy knows that there is no better tool for educating customers than letting them try out an electric bike or motorcycle for themselves, so having customers test drive the vehicles is critical for success, along with quality after-market service, which will be provided by the Geek Squad.
(One interesting concept, related by Mr. Bell, was the notion that EVs, and specifically electric bikes, could have plenty of unexpected benefits for customers. For example, he related a story about a customer who could not ride a standard bicycle, due to back problems. She was quite ecstatic to find out how easy an electric bike was to ride, and that, if she had one, she would be able to ride along with her children, something that she had not previously been able to do.)

Currie Bikes at Best Buy

Mr. Bell laid out the company's strategy for moving into different segments of the EV market, with each successive entry representing a larger market opportunity, and requiring a larger education effort for Best Buy. This education process starts with currently available product offerings, starting with non-licensed electric bikes, such as the A2B, and then moving into motorcycles, such as the Brammo Enertia.
The next step is to begin testing out early-generation electric cars, such as the Mitsubishi i-MEV, and, in 2009, four i-MEVs were painted in Geek Squad livery, and are currently part of the fleet. Rick Rommel, senior vp of emerging business, told BNET's Jim Motavalli, “We like what we see...They're pretty good and our agents like them."
Subsequent steps include bundling car-sharing programs, such as Zipcar, with its EV products, offering access to the company's on-site charging infrastructure (used to charge Geek Squad vehicles) , introducing Neighborhood Electric Vehicles (NEVs), such as the Miles ZX40S or the GEM, and potentially introducing, mass-production, full-speed, electric automobiles.
Although they appear to be off to a good start, the success of Best Buy's strategy is certainly not a given. As Russ Finley of Grist.org points out, "customer support is critical for retail sales, however, they are about to embark on a steep learning curve. Many bikes will be returned because they don't meet the near infinite variety of customer expectations. A 300 pound guy who thinks he is getting a scooter will not be pleased to find his range is only five miles..."
Of course, this is all the more reason why customer education is so important.