After several delays, BestBuy.com set for overhaul

The online wing of giant electronics retailer Best Buy has quietly shuttered its virtual doors as it readies its long-awaited expanded Web store. After at least two delays, BestBuy.com will reopen its doors within the next 45 days.

When the site relaunches, it will face stiff competition from traditional rivals such as Circuit City and online giant Amazon.com, both of which began selling consumer electronics online last summer.

Despite the competition, Gomez Advisors analyst Barrett Ladd said that Best Buy's brand and the site's integration with its offline stores could help it stand out.

"In the long run, they have the potential to be very successful," she said.

But to date, few traditional retailers have been able to translate their offline prowess into online success. Toys "R" Us, for instance, saw a highly touted deal with Benchmark Capital fall apart last year, then ran into troubles with site outages and with fulfilling orders placed through its Web site.

After trying to launch a new brand for its online computer store last year, CompUSA later reversed course and pulled the Web store back under its name and auspices.

Best Buy has had its own troubles. It launched its first Web store in 1997, but it only offered CDs and DVDs. Analysts expected an expanded site by the middle of last year, but the company delayed the relaunch and largely missed out on last year's holiday season. Best Buy then planned to relaunch the site early this year before apparently delaying it again.

Despite those delays, BestBuy.com will fare better than other clicks-and-mortar stores because the site is meant to complement Minneapolis-based Best Buy's offline stores, BestBuy.com chief executive John Walden said. Customers will be able to pick up and return items ordered online to the company's physical stores. They also will be able to order products they can't find in the stores online through in-store kiosks.

Best Buy is counting on the online store drawing in new customers. Although less than 20 percent of the company's future sales may come online, the company believes that a large portion of its customers will interact with the company on the Web, if only to research products.

"The online channel is critical to service our customers," Walden said.

The company has begun beta-testing the new site, which will initially sell home audio and video equipment, digital cameras, and portable stereos.

In recent months, Best Buy has been gearing up its online efforts. The company signed a deal in March with Micron Electronics to set up Internet kiosks in 357 Best Buy stores to allow customers to order custom computers from Micron. Late last year, the company invested $10 million in Etown.com, giving BestBuy.com access to Etown's consumer electronics news and product reviews.

In December, Best Buy signed a deal with Microsoft that included an agreement to promote BestBuy.com on the software giant's MSN properties.

The site's relaunch comes as investors seem to have lost interest in consumer e-commerce. Everyone from Amazon.com to Pets.com has taken a pounding, as investors have moved their money into other industry sectors.

For the time being, Walden said, Best Buy does not plan to test the markets with a BestBuy.com public offering.