Emerging Customer Channels

Strategy & Investment Brief

March 17, 2008

Executive Summary

Today and Tomorrow

 Internet access in 2007 1 billion people worldwide with 845 million regular
users.
 FY12 potential marketplace of $96 billion.
 BBY organic growth projections for BestBuy.com of $5 billion by 2013 from
$1.4 billion.
 New Growth of $5 billion generated by Emerging Customer Channels &
White Label. This white paper strategy and investment brief will capture
Emerging Customer Channels as defined below:
o Mobile Channel Accessibility Play
o Participation in direct and indirect communities
o Web Services, and
o General new business ventures/models

The goal of this white paper is to outline the Emerging Customer Channels strategic
imperatives that are required to realize the Enterprise Growth Goal of $6 billion in New
Business Model Growth by FY13. Bestbuy.com plans to capture 10% of the projected $96
Billion online marketplace in two ways: 1) $5B Best Buy.com and 2) $5B through growing and
leveraging White Label Brands, Emerging Customer Channels, Online Community and New
Business models. These Strategic imperatives will contribute to the Enterprise Growth outlined
in the FY-09 Domestic GIG Plan. Further, as social networks and the mobile lifestyle continue
to accelerate and become incorporated in consumer behavior, the online/offline shopping
influence and environment becomes even more critical.

Best Buy must focus on and leverage existing assets to grow and enhance new emerging
customer channels. The company needs to implement strategies that serve customers in the
way the customer elects to be served not on how the Company wishes to serve with existing
channels. Part of the future shopping environment has no hours and no doors - this new
“always on” tipping point environment is part of the future that the Company must pursue.

Best Buy’s heritage was founded in a world class physical store experience. Imagine if Dick
Schulze had chosen to grow Best Buy by opening only one large Best Buy store the size of the
Mall of America and required everyone across the nation to fly to Minnesota to experience the
Best Buy brand; this is essentially what Best Buy’s presence online is today within the “walled
garden” of Bestbuy.com. We need to pursue “virtual densification.” Like our physical-store
approach of “market densification” this strategy fuels growth where the market demand exists.
Conversations are happening online in spaces where Best Buy currently doesn’t exist. The
following graphic captures the essence of online presence needed beyond Bestbuy.com:

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Best Buy is capturing only a tiny percentage of time spent online by US Internet users – less
than .05% of time spent online last year was spent interacting with BestBuy.com. (Source:
Compete.com “Attention Share” reporting)

Fundamental changes in consumer behavior are driven by three trends:

 Ubiquitous high speed Internet access from home and mobile devices
 Improved handheld devices that make mobile Internet access as efficient as the
standard PC, but are everywhere, all the time
 Critical mass of consumer participation in online communities

The combination of these three factors is bringing about an evolution in consumer behavior.
Online information is being integrated into offline shopping behavior. Online, consumers are
increasingly referencing peer evaluations, price comparisons, and “online reputation,” prior to

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purchasing. Consumer data shows the importance of online influencing offline sales: Fifty
percent (50%) of customers that purchase in the store have visited BestBuy.com in the past 30
days. The data shows Home Theater and Computing are the two areas most influenced by
BestBuy.com. Just as Best Buy has a presence in the physical world, the company must
establish brand recognition, value proposition, and reputation online. Failure to adapt and
adopt amounts to silence and lost business both having tactical and strategic implications.

Why invest in Emerging Customer Channels and New Business Models? Best Buy’s leading
market share in the CE industry will be diminished. The Company must stretch the brand
presence into the spaces customers expect to be served “beyond the box” and the “walled
garden” channels in which we currently reside. Failure to understand and capture opportunities
leads to opportunity costs, and risk of erosion of the brand promise. Customers expect Best
Buy to have a presence in emerging channels.

The industry trend of web influenced store sales continues to accelerate according to Forrester
via eMarketer. The following chart shows that the influence of e-commerce sites is expected to
continue to see dramatic growth over the next 5 years.

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What this means is that Best Buy and BestBuy.com must accelerate movement of the Best
Buy experience into the new emerging channels in order to capture the expected 10% share of
the $96 billion online marketplace by FY12. Best Buy customer shopping behavior confirms
accelerated growth in online influencing of offline sales. Best Buy customers are choosing to
shop fluidly across stores and online channels. In December 35% of Best Buy retail purchases
were directly related to visits to BestBuy.com. In addition 66% of store purchasers had
indicated that customers had visited Bestbuy.com site in the past 30 days. This information is
collected from the Best Buy Retail True Blue CSI survey.

Another relatively new data point that we have is that in December 80% of visitors to
BestBuy.com indicated that customers had been in a Best Buy retail store in the 30 days
before their site visit. This information is collected form the BestBuy.com Browse Abandonment
survey.

Four areas of investment have been identified which provide unique leverage, opportunities for
rapid growth, potential new revenue streams, asset creation and hedges for the franchise.

1. Mobile Channel Accessibility Play

2. Participation in direct and indirect communities
3. Web Services, and
4. General new business ventures/models

The Market – Size, Attractiveness and Segmentation

Our defined online market space in the categories in which Best Buy participates will be $96
Billion by 2013.

Target Customer – “Experientials”

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 Experientials are confident T&E aficionados who love browsing, shopping for, and using
technology products and services. They seek “certainty” across the entire T&E purchase path
(dreaming, shopping, exploring and owning). Experientials are energized by the process of
learning/exploring options to feel confident they have chosen the right products and ensure
that they get the most out of their ownership experience. Consequently, they seek
opportunities to connect with “tech-influencers” to whom they look for advice and to learn from
their experiences.

Experientials have the highest mean annual T&E spend ($1,848/year, of which 35% is spent
online.) They account for 29% of total T&E spend, and Best Buy currently only captures
roughly 22%. Despite preferring to purchase in store, Experientials exhibit significant “multi-
channel” behavior. As an example, within 30 days of making their in store purchase 67% of
Best Buy’s Experientials visit BestBuy.com.

Mobile, community, and web services “halo” heavily to Multi-channel Texperts who are even
more knowledgeable about T&E and have a stronger propensity to purchase online. Multi-
Channel Texpert’s T&E spend is $1,748/year (of which 55% is online.) They account for 22% of
total T&E spend, and Best Buy captures a dismal 13% of their in store spend. These target
segments intersect heavily with the Barry and Buzz segments, and is highly relevant to youth
targets.

Brand Positioning

The Best Buy Brand identifies the Experiential Demand Cluster as its core target with Multi-
Channel Texperts as a halo target. Consequently, leveraging Best Buy’s high brand awareness
and affinity initially (especially with Experientials) is recommended. Further, this provides the
Brand a mechanism to credit facilitating a “conversation” between enthusiasts to help them feel
supported (and never leave them hanging.) Online communities may be leveraged on
BestBuy.com as well as other sites on the web where Experientials spend time.

Emerging customer channels presents a unique opportunity to leverage the strength of the
Brand to deliver the Brand promise of trusted perspective for inspired living in spaces the
customers chooses the spend time within and outside of Best Buy’s existing channels.

Overall Investment
Scope & Timeframe FY09 ROI Potential Partners
Definition of Budget Ask (internally or
Proposed externally)
Activity /
Projects
I. New Business Capability Models
I. New Engage with FY09: Partner $2M in Hyper growth Internal:
Business portfolio of new with BBY Capital investment market returns OGs,BBY Capital,
Models – high growth Corporate dollars for Digital Business
“Emerging companies to Development to strategic Group, Corporate
initiative beta ensure detailed investments Development.
Channels
pilots that will analysis done on
Strategic inform future potential plays. External:
Investment capability needs BBY Capital, Yossi
Plays” FY10 & FY11: Vardi, The
Purple Wave Implementing Conversation Group,
Hybrid New Business Fixya, Purple Wave,
Internet/Live Models at scale Fon,
Auction Model, level Sociate
Fixya crowd

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 sourced support
and service
community, Fon
largest global
community based
WIFI play.
II. New Social Capability Models
Direct Create an outlet Solution would $550 K host -Reduced Call Internal:
Community to allow customer be up by July of site externally Center Digital Business
to search for FY09 Expense: $800K Group, BBY Capital,
answers, discuss Estimates Yr 1 Call Center, TGMS,
common issues start up -Experience CEC, OGs,
and topics, post expense share Bestbuy.com,
questions to the $100K (.com $7-10M benefit Marketing
community, and vendor overall by FY13
escalate costs) -Reduced Store External:
questions to Hosting Return Rate Fixya, Lithium, Future
experts, and gain $3k/Month -Increased Shop, Bestbuy
peer status; Moderation Customer Canada, Jive, Bizarre
allowing Best Buy Expense Satisfaction / Voice, Sociate,
to lower costs, $250K Loyalty Hinchcliffe, Accenture
gain insights, Professional -Customer
reduce returns, Services Knowledge
increase traffic, $150K Capture
boost loyalty and
gain control $65M Net
Revenue by
FY12
(Accenture, BBY
Finance)
Indirect Find new ways to March FY09 3-31 $ 800K– this Experience Internal:
Community engage launch date of links up to share, reduction Digital Business
customers outside Fixya, crowd business in call center Group, BBY Capital,
of the boundaries sourced tech models as expense, Brand Call Center, TGMS,
of our existing support well awareness, and CEC, OGs,
online assets. community play customer Bestbuy.com,
on bestbuy.com, $300K Fixya lifetime value. Marketing
geeksquad.com $150K Social $64M in net
& integrated Network Pilot revenue via new External:
within the call $200K Get business Fixya, Get
center. Satisfaction models (Eg. Satisfaction, The
Support & Future Shop ad Conversation Group,
Service Play model) Don Tapscott,
$150K Vertical Sociate, Hinchcliffe,
Community Source: BBY Accenture, Flickr
Play Finance, askville, Yahoo!,
Accenture TechCrunch,
myspace.com,
facebook, technorati,
eHow, eggxpert,
answerbag, Zolved,
Do It Yoursef.com,
support space beta

Scope & Timeframe FY09 ROI Potential Partners

Definition of Budget Ask (internally or
Proposed externally)
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 Activity /
Projects
III. New Technology Capability Models
Mobile Stabilize Organic FY09 - annual $200k (equals Multi-channel Internal:
Channel, Mobile. Build out 2 FTE for Customer Best Buy Mobile,
accessibility and operational maintenance) experience Marketing, Digital
play support for beta share in hits to Business Factory,
model view hot ad OGs, Best Buy
items in weekly Connect, Call Center,
circular. TGMS, CEC

Close rate External

Sociate, Accenture

Test enhanced FY09 – Launch $500k New revenue Internal:

version of Mobile test by June/July (includes opportunity of Best Buy Mobile,
technology $88 million net Marketing, Digital
and design revenue(Source: Business Factory,
services for Accenture and OGs, Best Buy
multi-store BBY Finance) Connect, Call Center,
test) TGMS, CEC

External
Sociate, Accenture,
Gartner Group,
Forrester
Develop longer FY09 – March $300k working Mobile Internal:
term strategy for ’09 and garner with Accenture commerce site Best Buy Mobile, BBY
mobile (needs to existing talent consulting with ability to Connect, Marketing,
link in with multi- from Accenture transact via Digital Business
channel strategic savvy in mobile, mobile phone’s Factory, OGs, Best
work) marketing and uniquely Buy Connect, Call
community simplified user Center, TGMS, CEC
interface.
External
Sociate, Accenture,
Gartner Group,
Forrester
Web Services This is comprised FY09; -$500k in new New revenue I Internal:
Projects of: web positions opportunity $77 CEC, BSN, BBTG,
FY10 - other -$350k in Million Accenture, Digital
- Delivery of open projects would be backfill for incremental Business Factory
API’s to unlock kicked off in support team market demand
data, and -$250k Web (source: External
- The set up of a FY11 - TBD consultants Accenture and The Conversation
Blue Shirt -$300k BBY Finance) Group, Hinchcliffe,
Developer Technology Tim O’Reilly, Mashery,
Community (tools, Setup, Sociate, Accenture,
development Monthly fees Affiliate partners,
methods, Other Channel Intelligence
etc). Total: $1.4M
Overall - Program Mgmt Ongoing Years 1 $500k for Enterprise Multi-
Administration - Change Mgmt & -3 FY09 channel program
& Organizational Management,
Management Transformation Change, Education,
activities
of all 3 areas Communications,
- Other
Marketing Yellow
Tag , The
Conversation
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 Group, and
ECC/Bestbuy.com/
OG Digital Business
Group Coordination
and new capability
support.
Total: $4.5
Million in
FY09 +/- 10%
= $5 M
approximate
*Note: we will be asking for $5 Million in investment to move forward with the Emerging
Business transformation against a sales goal of $5 billion for Best Buy in a marketplace where
we could go after even more ($96 Billion potential).

The Strategy and Market Attack

Emerging customer channels presents a unique opportunity to leverage the strength of the
Brand to deliver the Brand promise of trusted perspective for inspired Living. Investment in the
following areas as an overall transformative emerging channels program is recommended:

1. Mobile accessibility play

2. Participation in direct and indirect communities
3. Web Services, and
4. General new business ventures/models

Mobile, Accessibility Play

The Mobile Channel provides customers the ability to access Best Buy from anywhere via
a Mobile Phone (see m.bestbuy.com mobile web experience tailored to meet the users’ unique
needs throughout the consumer infinity cycle). Best Buy must prioritize and support Mobile
Channel creation. A long term first and best to market strategy in this emerging channel must
be pursued. Investment now will allow the working prototype beta version of Bestbuy.com to
continue with Enterprise cross functional testing and support from BBY Mobile, Digital
Business Factory, Marketing and Bestbuy.com. The opportunity exists to provide ubiquitous
access to all Best Buy knows via a device that is in the hands of nearly all of our customers.
The mobile phone is becoming increasingly important as a channel for customers to locate,
gather and consume information & content. In technologically advanced geographies, like
South Korea payment via phone is already the norm, in the US, leading online retailers such as
Amazon.com already have this capability.

The following frame depicts why the emerging mobile shopping channel is important to our
customers and to Best Buy:

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Customer usage statistics demonstrate the behavioral shift occurring without a large selection
of devices in play. IDC data shows growth in shipments of converged mobile devices allowing
customers easier access to information, when and where they choose to engage. Moreover,
Google reports high adoption stats suggesting light weight user interface and simplicity drive
consumer adoption.

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Definition: BBY has the opportunity provide ubiquitous access to all Best Buy knows via a
device that is in the hands of nearly all of our customers. The intent of the mobile effort is to
extend the reach of the online channel to enhance and augment the in-store experience,
enable seamless information gathering and exchange, drive customer traffic from the local
community into the store, and capture on-the-go customer demand.

1. Stabilize Organic Mobile

2. Test enhanced version of Mobile
3. Develop longer term strategy for mobile (needs to link in with multi-channel strategic
work)

"Mobile phones are cheaper than PCs, there are three times more of
them, growing at twice the speed, and they increasingly have
Internet access. What is more, the World Bank estimates that more
than two-thirds of the world's population lives within range of a
mobile phone network. Mobile is going to be the next big Internet
phenomenon. It holds the key to greater access for everyone - with
all the benefits that entails." Eric Schmidt, CEO Google

Example: Launched http://m.bestbuy.com prototype Mobile application in 7 days with little

to no budget. Contains all products, customer ratings, and all store maps.

Best Buy needs to do the work to define a Mobile Strategy

“A mobile Web strategy is essential for any organization with customer-facing systems or
relationships… …Define your mobile Web strategy as one element of a broader multichannel
strategy.”- Gartner

The graphic below shows the phased approach taken to garner the first to market opportunity
that exists when investing in the mobile customer experience described:

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Strategy & Tactics:
Create a tipping point to purchase in the stores by putting the information from BestBuy.com in
the palm of your hand whether you are a customer or an associate.

M.bestbuy.com evolution and progress to date:

Milestones to date as of 3-08:
The m.bestbuy.com beta launched and gained momentum throughout the enterprise. To date
include:
• Launched http://m.bestbuy.com “beta” Mobile application in 7 days with little to no
budget. Contains all products, customer ratings, and all store maps.

• Supported launch of New Blue as new VPE.

• First to market in bricks retail space with full product catalog and store maps
available to the Mobile.

• Led exploration into new possibilities leveraging the Digital Business Factory
prototyping
– Thick Client for Blackberry
– Thin Client with “Research Briefcase” concept.

Participated with MKTG in February

computing campaign serving 39,000 potential customers viewed our first
promotional Mobile webpage to Marketing attempt in the Mobile space via
39k visitors and saving Ad spend m.bestbuy.com.
with Avenue A and allowing us to
learn in an emerging space.

Featured the Mobile project as part of

the Web 2.0 Education series to
the acclaim of present industry
experts and associates across
Best Buy for speed to market and
being ahead of the curve.

Recently our work is being discovered,

SitePoint, a prominent blog on
Web Design, noted m.bestbuy
.com as a good example of
simplicity and catering your site to
the Mobile consumer’s needs. [ Thousands searched and viewed
http://www.sitepoint.com/article/designing-for-m laptop models and found maps to their
obile-web/2 local Best Buy.
]

Near Term: Increase store conversion, create a tipping point to purchase in the stores by
putting the information from BestBuy.com in the palm of customers and Blue Shirts hands.

Looking towards the future: Mobile provides a platform to supporting and serve our
customers and allowing them to purchase from us in a in a personalized and convenient way.

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We are where you need us anywhere, any time. Own service and support online and in the
palm of your hand.

Target Customer: Experientials are confident T&E aficionados who love browsing, shopping
for, and using technology products and services. They seek “certainty” across the entire T&E
purchase path (dreaming, shopping, exploring and owning). They are energized by the process
of learning/exploring their options to feel confident they have chosen the right products and
ensure that they get the most out of their ownership experience. Consequently, they seek new
and more convenient ways to engage with our brand. Especially during the dreaming,
shopping and exploring phases, customers seek convenient access to detailed product
information as well as unbiased advice (like that provided by ratings and reviews or third
parties.) Lastly, customers seek ways to bridge the gaps they experience as they move
between channels during their research and consideration process (e.g. how do I get more
specs bout the products I saw in store – and how do I even remember which particular model I
was looking at?)

Experientials have the highest mean annual T&E spend ($1,848/year, of which 35% is spent
online.) They account for 29% of total T&E spend, and Best Buy captures roughly 22%
currently. Despite preferring to purchase in store, they exhibit significant “multi-channel”
behavior. As an example, 67% of Best Buy’s Experientials visit bestbuy.com within the 30 days
prior to making a purchase.

Mobile Applications “halo” heavily to Multi-channel Texperts who are even more knowledgeable
about T&E and have a stronger propensity to purchase online. Multi-Channel texpert’s T&E
spend is $1,748/year (of which 55% is online.) They account for 22% of total T&E spend, and
Best Buy captures 13% of their in store spend. These target segments intersect heavily with
our Barry and Buzz customer segments, and is highly relevant to youth targets.

Brand Positioning: The Best Buy Brand identifies the Experiential Demand Cluster as its core
target with Multi-Channel Texperts as a halo target. Consequently, leveraging Best Buy’s high
brand awareness and affinity initially (especially with Experientials) is recommended. This
provides our brand an additional touch point to provide information and a trusted perspective in
a highly convenient way – when and where our customers seek information. By providing this
ultra convenient access to information, mobile applications have high potential to increase
affinity for the Best Buy brand, drive more traffic to the store and drive higher conversion in
store.

Value Proposition:

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Resource Request and Investment- $1M Investment requested

1. Build out and operational support for beta model of m.bestbuy.com- $200K (equals 2
FTEs)
2. Pilot next version of m.bestbuy.com for full scale- $500K
3. Technology and design services for multi-store test
4. Launch Enterprise support for mobile space requiring cross company horizontal
resources and expertise from Best Buy Mobile, Bestbuy.com, Rapid prototype
environment (Digital Business Factory), and large scale change and communication
support for program $300K

Key Milestones & Timeline:

FY’09 Q1
1. Stabilize m.bestbuy.com mobile site and growth
2. New Blue Support
3. Launch Accenture Strategic view of emerging mobile channel- $150K
4. Test enhanced Mobile versions in rapid prototyping environment
5. Launch overall Enterprise program approach leveraging cross functional expertise from
BBY Mobile, Marketing, & Bestbuy.com to truly enhance speed to market to capitalize
on this “Blue Ocean” strategy

FY’09 Q2
1. Launch developer community
2. Determine measurement, distribution, and economic value capture for Best Buy
Launch enterprise pilot via integration of mobile into Back to School Campaign efforts.

FY’09 Q3
1. Market rollout of M.bestbuy.com within key pilot territories to fully leverage multi-
channel
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 2. Launch full campaign for Holiday

FY’09 Q4
1. Full launch of m.bestbuy.com nationwide and integration into nationwide holiday
approach

Supporting Short Term Resource Detail:

• Program Manager - Site functionality, planning (FTE 100%)
• Business Lead (FTE 50%)
• $150K Accenture Professional Services Budget
• Developer - Create, maintain and support site. (Contract/FTE 50%)
• Operational support - Data feed stability, monitoring, reporting and analysis
(Contract/FTE 50%)
• Marketing Engagement Support (1 50% FTE)
• Program Manager (1 FTE)

Direct and Indirect Online Communities:

Definition -Direct Community plays: consist of Best Buy support and service forums as an
extension of the customer experience Best Buy delivers today merely extending the care
beyond the phone to online.

Create an outlet to allow customer to search for answers, discuss common issues and topics,
post questions to the community, escalate questions to experts, and gain peer status. Various
companies from manufacturers to retailers are successfully using community forums to
strengthen brand loyalty, drive customer support costs down, increase customer and product
knowledge, Identify unmet customer needs and increase traffic to their web sites.

Best Buy expertise combined with unique customer knowledge captures customer experience
share benefit when Best Buy serves the customer in that moment of need.

*Note: Best Buy needs to be Best in Class, but currently behind. Circuit City – Recently
updated with additional Web 2.0 Functionality – Circuit has already evolved from simple
community forums to a multi-faceted social networking site including blogs, profiling, tagging,
etc..

Strategy and Tactics: Deliver “Never Leave You Hanging” Brand Promise by creating a best-
in-class service and support destination within the bestbuy.com ecosystem where customers
can connect with other customers, Best Buy Experts, and external expert content. 1.4M
customers visit the customer care experience on the Bestbuy.com website today. Allowing
customers to engage with experts online is a natural extension of the customer care capability.
Shifting conversations online generate hard and soft benefits. Bestbuy.com addresses the
transaction needs but falls short on delivering service level outputs consistent with the brand
promise of “Support Me” in the online support and service experience.

• Customers are increasingly expecting more community oriented sales, support, and
service options
• Self Serve and peer-to-peer service and support options are limited in BBY.com and
phone channels
• Leading competitors are ahead of BBY.com in community features, offerings, and
expertise

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 ‘Direct’ Communities Vision: “The Web’s Best
support and Service Destination”

Need For a Cohesive Customer Strategy To Pull Together Pre-Sales Research, Post Sales
Support, and Brand Based Discussions. One Common User Experience With A Single
Integrated Sign In To Get Access To Unique Discussion Topics

Pre-Sales Solutions: Brand Feedback:

Ratings and Reviews Channel Discussions (Phone,
SKU Specific Ask and Answer “Experts” Web, Stores)
Collaborative/Community-Based guided Idea Storms
selling and recommendations What products / services
should Best Buy offer
next?
Employment Zones
Post-Sales Solutions: Cultural Zones (Hispanic, Working
Lifestyle Based Discussion Topics: Women, etc..)
Digital Imaging Tips and Tricks Reward Zone Discussions
Scrap Booking Basics Geek Squad
Moderated Technical Support Areas
Generated BBY Content

Benefits: Direct Communities within BBY.com and Call Center channels represents $7-10m
hard and soft benefit combined. Further, Future Shop has taken a community model of alpha
tech users and turned it into a new business model generating over $1M in incremental
marketing development funds. An outside agency sells the community space on behalf of
future shop. This shifts the funding model a market demand model driven by the desire for
vendors, advertisers to have access to a very targeted community of tech users. Future
provides a very compelling use case for investing in both direct and indirect community space.

• Lower Costs - $5-$7M reduction in yearly call center expense

• Increase Traffic – Compelling reasons to visit BBY.com
• Boost Loyalty – Forum participants are 9X more likely to revisit your site, 2X as loyal,
Purchase 2X as often, Purchase 5X more than the avg customer
• Gain Control – Communities will form an opinion around your solution whether you
choose to host them or not
• Extend Existing Capabilities – Win with what you have in BBY.com, but make the
experience more relevant.

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Definition: Indirect community plays: Beyond the Best Buy Community plays, indirect
community participation is a strategic imperative. Find new ways to engage customers
outside of the boundaries of our existing online assets – an opportunity to draw
customers to the brand and reinforce our value proposition in both the sales and support
phases of the cycle

The investment is justifiable purely on traditional measures of return: incremental margin, lower
costs. The additional measures of success reflect a much larger opportunity: capturing non-
traditional (read: excessive) returns leveraging the hyper-growth of others’ platforms.

Value Proposition:

Experience the Best Buy brand in places beyond the existing channels of Best Buy. Best Buy
will participate and offer support in communities where customers already spend time. Online
consumer behavior shows a trend in customers engaging in Peer-to-Peer service & support
communities. Support and service communities are proliferating on the internet. Two leading
communities for Best Buy pilots include: Fixya and Get Satisfaction.

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Indirect Community evolution and progress to date:

Fixya (community based crowd sourced tech support) is a great example of an indirect partner
play but also ties directly to Bestbuy.com customer care and Bestbuy.com to leverage traffic of
the 540M visits to Bestbuy.com per year and the $1.4M customer visits to the customer care
link on Bestbuy.com. This community play will launch on Bestbuy.com and Geeksquad.com
March 30, 2008. Best Buy Canada launch of Fixya crowd sourced tech support currently in
review by the operational support team but plan to launch at a later phase.

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 Geek Squad agents will post
solutions in Car / Mobile,
Home Theater and PC-related
forums
Geek Squad badge, Agent # will
display

Site will include support for Best

Buy categories that
GeekSquad doesn’t support
today (like appliances)

Site will feature entry points back

to BestBuy.com and
GeekSquad.com (with a REF
and LOC for tracking
purposes)
Opportunity: Fundamentally, the argument for participation in indirect communities comes
down to where people are spending their time on the Internet and where they're getting their
information. The answer: online social networks and communities.
Indirect Community plays represent a major strategic opportunity for BBY because:

 Corporate Web presences are rapidly breaking out of their Website "boxes" and
spreading elsewhere.
 Web services capabilities permit deployment of widgets and mashups (eg, APIs from
Netflix, YouTube, Amazon and more).
 Facebook and MySpace now host corporate presences, featuring high traffic volumes
 Hosting communities on your own sites is essential, but expected; showing up
appropriately in others creates opportunities to delight customers and attract potential
customers in unexpected ways.
 The costs of participating on third-party sites are much lower than on your own.
 Allowing Blueshirts and Geek Squad staff to follow their interests into third-party
communities creates a vast footprint for BBY.
 That, in turn, creates a much larger distributed presence for BBY than the company's
own sites could ever generate (touching many people beyond the 540mm visits that
BBY.com now gets, for example).
 All these "moments of truth" create opportunities to impress people and attract them to
BBY for transactions.

Nobody else in the retail space has claimed this ground yet; a successful first-mover could
create a systemic advantage that is hard to counter.

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Evaluation Framework

These and all other online community opportunities should be evaluated against four criteria:

1. Are these the leading communities in terms of reach? size? growth?

2. Does the project allow us unfair leverage in unique assets we possess in the social
sphere? (e.g., Blue Shirt Nation, large physical footprint, current customer base traffic
and activity)
3. Will this create an asset in terms of internal capability, tools, traffic, destination? Will we
build an internal capability to understand where to best use our firepower?
4. How close are we to a point of transaction?

The problem is that traditional measures of return favor investments that have traditional rates
of growth. They don't measure opportunities lost from the roads not taken. New opportunities
that might lead to hypergrowth should be evaluated differently to enable speed to market.

What is hypergrowth? Look at the growth rates of the most popular services and devices now:
Facebook 50% y/y, iTunes sales, 50% y/y, iPhone (zero to10mm units in under a year).

To participate in this non-linear growth, we should evaluate using the following four criteria:

1. New influence or reach. Measure increased traffic over a baseline.

 Are these the leading communities in terms of reach? size? growth?

2. New utilization of current assets (multi-channel).

 Does the project allow us unfair leverage in unique assets we possess in the social
sphere? (e.g., Blue Shirt Nation, large physical footprint, current customer base
traffic and activity)

3. Creation or acquisition of fast-growth assets.

 Will this create an asset in terms of internal capability, tools, traffic, destination? Will
we build an internal capability to understand where to best use our firepower?

4. New sources of transactions. New opportunities for revenue

 How close are we to a point of transaction?

Strategy & Tactics:

Find new ways to engage customers outside of the boundaries of our existing online
assets – an opportunity to draw customers to the brand and reinforce our value
proposition in both the sales and support phases of the cycle. Develop a strong engagement
marketing capability to develop new business models within the existing communities. Further,
explore new ways to engage the customer with the Best Buy brand in a way that inspires an
additional click through or transaction.

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 Examples of indirect Social Spaces in The Customer’s End-to-End Experience

For each one of these intentions customers have many options of who, where and how to engage.
‘Social Spaces’ are increasingly becoming one of those options

Target Customer - Experientials

Experientials are confident T&E aficionados who love browsing, shopping for, and using
technology products and services. They seek “certainty” across the entire T&E purchase path
(dreaming, shopping, exploring and owning). They are energized by the process of
learning/exploring their options to feel confident they have chosen the right products and
ensure that they get the most out of their ownership experience. Consequently, they seek
opportunities to connect with “tech-influencers” to whom they look for advice and to learn from
their experiences.

Experientials have the highest mean annual T&E spend ($1,848/year, of which 35% is spent
online.) They account for 29% of total T&E spend, and Best Buy captures roughly 22%
currently. Despite preferring to purchase in store, they exhibit significant “multi-channel”
behavior. As an example, 67% of Best Buy’s Experientials visit bestbuy.com within the 30 days
prior to making a purchase.

Online support communities “halo” heavily to Multi-channel Texperts who are even more
knowledgeable about T&E and have a stronger propensity to purchase online. Multi-Channel
texpert’s T&E spend is $1,748/year (of which 55% is online.) They account for 22% of total
T&E spend, and Best Buy captures 13% of their in store spend. These target segments
intersect heavily with our Ray, Barry and Buzz customer segments.

Brand Positioning
The Best Buy Brand identifies the Experiential Demand Cluster as its core target with Multi-
Channel Texperts as a halo target. Consequently, leveraging Best Buy’s high brand awareness
and affinity initially (especially with Experientials) is recommended. Further, this provides our
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brand a way to get credit for facilitating a “conversation” between enthusiasts to help them feel
supported (and never leave them hanging.) Online communities may be leveraged on
bestbuy.com as well as other sites on the web where Experientials spend time.

Specifically, an online community housed on bestbuy.com providing help/support to our

customers gives them more reasons to visit our site and drives brand affinity. Geek Squad
could potentially be leveraged as an “expert” participant to further drive Best Buy brand
preference. Lastly, as an added benefit – support provided online via a forum or community
provides cost efficiencies by reducing inbound call volumes.

Resource Request and Investment- $1.4 M Investment requested

DIRECT COMMUNITY- $550K Investment

 Build out and operational support for beta model of m.bestbuy.com- $200K (equals 2
FTEs)
 Estimated Start Up Expense: $ 100K (.com and vendor costs)
 Estimated Monthly Hosting Expense: $3K / Month
 Estimated Moderation Expense (Agent Labor): $250K / Year
 (Staffed by Blue Shirts)
o Estimated Total 1st Year Costs: $400K
 Enterprise Community Customer Experience professional services: $150K

INDIRECT COMMUNITY- $800K Investment

Recommendations

Modest investment in indirect online communities could lead to an outsized gain. Pilot efforts
will focus on the following which the priority investment to include investment in the online
services story, support & service online communities. This prioritization and investment will
help shape our future support & service capabilities.

 $300K Fixya engagement marketing and online business model exploration given
Future Shop success of generation over $1M in incremental marketing development
funds. Hosting funds required beyond 90 day pilot phase. Currently Fixya bearing 100%
of cost for pilot.
 $150K on largest community in leading social network site, includes online engagement
strategy
 $200K on support community participation project eg. Get Satisfaction, includes online
engagement strategy
 $150K on vertical community participation project

Facebook is a natural place to invest. Note the following figures for US Traffic ONLY:

MySpace

 Total Uniques: 68 million. Down 1%

 Average Daily Visitors: 17.7 million. Up 3%
 Average Minutes Per Visitor: 242.9 Up 19%

Facebook

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  Total Uniques: 32.4 million. Down 4.2%
 Average Daily Visitors: 8.6 million. Up 2.6%
 Average Minutes Per Visitor: 161.3 Down 6.2%

Global: 90M, 80M respectively (Source: COMSCORE 3/2008)

For many, especially the younger generation, Facebook and MySpace are the internet. In
less than 3 years, the two services have gone from a standing start to 80 million and 40
million users respectively. 96% log in once a month; x% log in once a day. Indirect
opportunities provide a way to "ride" the growth that others have created.

Note that Facebook and MySpace are only behind Google, Yahoo and YouTube in US traffic
these days. Of all of these, Facebook is far more amenable to participation by companies
such as Best Buy. If our objective were to promote bands or movies, we would seriously
consider MySpace.

Fundamentally, the argument for participation in indirect communities comes down to

where people are spending their time on the internet, and where they're getting their
information. The answer: social networks.

Key Milestones & Timeline:

FY’09 Q1

 Launch customer experience exploratory short phase project to ensure strategic

approach to community serves the needs of customers in a holistic fashion based on
the ubiquitous access to online via multiple touch points and emerging channels.
 Leverage MCCP Customer Experience Design work to shape enterprise customer
experience
 Engage in discovery phase to assess outside forum partners to host a Best Buy
community forums solution
 Partner with Future Shop and Bestbuy Canada to understand fully the Future Shop
Community learnings and include all brands in community pilot strategy discussions up
front to ensure and Enterprise view.
 A series of pilots in Q1 of FY09 will allow Best Buy to develop a set of new customer
experiences that explore:
o Assess the impact of Best Buy serving as a customer advocate with brands via
an online space (Get Satisfaction)
o Gather and provide product level customer satisfaction data within online
communities (Flickr)
o Perform behavioral analysis of the active communities for Best Buy customers
and the ability to engage customers in those communities (Rapleaf and TBD)

FY’09 Q2
 Hosted Best Buy Forums solution deployed by July FY09.
 Fixya beta pilot results formalized & decision reached on scale
 Fixya investment stake or acquisition decision point June FY’09
FY’09 Q3/ FY’09 Q4
 Implementation of enhancements to Best buy forums and scope of next phase
 Assessment of MCCP integration and timing for Enterprise community approach.

Supporting Short Term Resource Detail:

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 • Program manger (1FTE 100%)
• Business Lead (1 FTE – Indirect 100%)
• Business Lead (1 FTE- Direct 100%)
• $200K Professional Services Budget
• $500K Indirect partner plays
• Program Manager (1 FTE- 100%)

Open APIs/Web Services

Rationale & Definition
One key component of Best Buy’s five-year growth strategy is increasing our share of the
online market. To grow in this market, we need to understand how our customers are using the
Internet and embrace new methods of reaching our customers and engaging with them.
Social networks and participation are not the future of the Internet; they are the present. As of
June 2007, social networking site Myspace.com was receiving 12.75% of all time spent online
by US Internet users. BestBuy.com is less than .05%.

Source: Compete.com, Attention rankings for June 2007.

"In the future social networks will be like air. No matter what you do, your social networks will
be there. The social graph and your identity will be at your fingertips."
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- Charlene Li of Forrester Research, keynote address at the San Diego Graphing Social Patterns conference, 2007

Best Buy cannot duplicate the reach and power of social networking sites, but we can
participate in this new ecosystem and reach our customers where they are spending their time.
Competitors such as Amazon.com are doing this by creating offerings that have attracted
hundreds of thousands of individual developers to participate in a development community that
provides expanded services to customers and creates value for all parties – Amazon, the
developers and the customers.
These offerings are based on using Web Services to deliver Open APIs and engage directly
with customers, creating not just stronger relationships with customers but entirely new ways to
deliver value. Best Buy needs to move quickly to seize market share in this rapidly-developing
and highly competitive space, and to support our brand image as a leader in technology.
If we can unlock our data from proprietary systems, we will unleash the human ingenuity of our
employees by giving them the ability to re-use and remix the data they need, free of the
boundaries of existing systems, and we will partner with external developer communities to
reach our customers in new ways.
This document summarizes a proposed new capability for Best Buy that is aimed at realizing
this potential. The initiative is led by BestBuy.com and relies on key existing partners and
capabilities for the initial implementation. The foundation for this work is the Digital Growth
Strategies work that has been performed at BestBuy.com in partnership with the Digital Factory
over the past 6 months. The contributions of New Paradigm, Hinchcliffe & Company and The
Conversation Group have been essential in defining opportunities and determining our near-
term strategic approach.
The objectives of this initiative are:
1. Generate revenue from incremental traffic to BestBuy.com
2. Grow the capabilities we are able to deliver to our customers without incurring
significant development cost
3. Support other initiatives (such as m.bestbuy.com and the Digital Factory) and partners
(such as Avenue A) with product information
4. Build business competencies in this new area to guide our efforts
5. Develop a deep understanding of the needs of developer communities and how to
partner with them to serve our customers
6. Support the “Never Leave You Hanging” brand value proposition
7. Support the “infinity loop” model of customer lifecycle
8. Build brand value for the enterprise

Market Opportunity
There are multiple possible models for gauging the opportunities of a Web Service strategy for
Best Buy.
 Bringing more people to BestBuy.com through greater exposure, widgets and other
methods (direct revenue)
 Bringing more people to Best Buy stores through those same methods (direct revenue)
 Increasing the value of our brand through greater online presence and awareness
(indirect)
 Deriving revenue from licensing our data or taking revenue share from use of our data
(direct revenue)

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The most tangible (and least difficult to measure) is the direct revenue opportunity available
through increasing the traffic to BestBuy.com. Appendix A provides the details behind the
model used, which is based on existing traffic projections, conversion rates and Average Order
Values. Using fairly conservative projections for increases in traffic, we project $154 million in
incremental marketed demand for the four-year period FY09-12, assuming that we are able to
deliver the first phases pre-holiday FY09.
We believe this initiative will deliver value across all of the above dimensions, but the direct
revenue alone justifies the investment.

Open API Business Strategy

Best Buy’s legacy model for value generation online is straightforward: vendors supply goods
and services to Best Buy, Best Buy adds descriptive information and offers and presents them
to the customer, the customer orders the goods and services.

Competitors and others in the online space are using Web Services and Open APIs to create
new kinds of value. Amazon has leveraged their base services into a platform, creating a new
ecosystem that drives value creation in multiple places.
By using Web Services to unlock our data, we will unleash human ingenuity and generate
value in multiple dimensions – increases in traffic and orders are only part of the full spectrum
of opportunities.

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Growing Our Business Online: Guiding Principles
In developing our plan, we have kept four principles in mind:
1. Meet the customer where they are
2. Unleash human ingenuity
3. Get up and running quickly
4. Maximize learnings (aka “fail quickly and cheaply”)
The plan is also based on the current state of dotcom data and services, leveraging what we
have learned from the SMART and ARIES projects about the challenges we face with
exporting and using our current product data set.
There are five workstreams for this project in FY09.

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Product Content governance
This workstream focuses on developing standards for product content creation that span
multiple business units and allow for external re-use. This should deliver benefit within
BestBuy.com as well, as content quality improves (as demonstrated by SMART). This will be
led by the Content Manager, and will coordinate with existing product content development
efforts at BestBuy.com.
Business Framework
This focuses on developing standards for product content creation that span multiple business
units and allow for external re-use. This should deliver benefit within BestBuy.com as well, as
content quality improves (as demonstrated by SMART).
Test & Learn projects
Within the Business Framework, we will manage multiple projects, aimed at building our
understanding of the capabilities that our customers (and developer communities) will find
most valuable. The governance approach piloted by the Digital Business Factory will be useful
here.
Evangelizing Open APIs
This workstream focuses on “getting the word out” across the enterprise, both about the power
and potential of unleashing human ingenuity by sharing data and about the capabilities offered
by the platform. A portion of efforts will be spent at corporate, and a portion in the field, getting
employee developers interested in using the Web Services platform.
Developer Community
This workstream focuses on building a community to support internal and external developers
who are working with our data. This is essential to success in this area. Appendix B presents
summaries of the capabilities offered by competitors in this space.
Capability delivery
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This workstream focuses on the actual delivery of the Web Services APIs. For FY09, the intent
is to work with a third party such as Mashery to provide the infrastructure. We will also rely on
BBTG and consulting services as we develop our own perspective on whether to bring the
capability in-house or continue to leverage third-party platforms.

Target Customer
Experientials (Multi-channel Texperts), reached through Internal Developers, External Affiliate
Partners and Professional Developers.
Experientials are confident T&E aficionados who love browsing, shopping for, and using
technology products and services. They seek “certainty” across the entire T&E purchase path
(dreaming, shopping, exploring and owning). They are energized by the process of
learning/exploring their options to feel confident they have chosen the right products and
ensure that they get the most out of their ownership experience. Consequently, they seek new
and more convenient ways to engage with our brand. Especially during the dreaming,
shopping and exploring phases, customers seek convenient access to detailed product
information as well as unbiased advice The customer requires “always on” access to product
information, offers and content – where and how they want it. Our partners seek access to
accurate and timely data, quick and agile access to “re-mixable” data, and unique classes of
data that increases customer clicks.
Web services “halo” heavily to Multi-channel Texperts who are even more knowledgeable
about T&E and have a stronger propensity to purchase online. Multi-Channel texpert’s T&E
spend is $1,748/year (of which 55% is online.) They account for 22% of total T&E spend, and
Best Buy captures 13% of their in store spend. These target segments intersect heavily with
our Barry and Buzz customer segments, and is highly relevant to youth targets who spend
significant time online.

Brand Positioning
The Best Buy Brand identifies the Experiential Demand Cluster as its core target with Multi-
Channel Texperts as a halo target. Consequently, leveraging Best Buy’s high brand awareness
and affinity initially (especially with Experientials) is recommended. This provides our brand an
additional touch point to provide information and a trusted perspective in a highly convenient
way – when and where our customers seek information.
By unlocking product information from BestBuy.com and allowing individuals and organizations
to make use of it in new and different ways, Web Services/Open APIs have high potential to
increase affinity for the Best Buy brand and drive increased traffic to the store both online and
offline. Web services provide “virtual densification”: more touch points and more traffic that
ultimately delivers greater sales. Increased conversation with strategic partners delivers better
data at partner/affiliate touch points and ultimately delivers better ‘qualified’ customer traffic.

Business Plan

Leadership Team
The leadership team is composed of BestBuy.com executives and key stakeholders:
 John Thompson
 Michele Azar
 Kevin Matheny

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Resource Needs

Core Team
The core team for the project is dedicated fulltime to working on the Web Services initiative.
These are new positions to be created within the BestBuy.com organization.
 Product Manager (TBD)
 Content Manager (TBD)
 Project Manager (TBD)
 Community Manager (TBD)

Support Team
The Support Team is drawn from other teams to leverage existing capabilities. These team
members will spend 10-20 hours per week working with the Core Team. Some funding may be
required to backfill these positions.
 BestBuy.com Product Content SME (.5 FTE)
 Analytics/Reporting specialist (.5 FTE)
 Finance lead (.25 FTE)
 Direct Marketing/Affiliate Program lead (.5 FTE)
 Field Liaison (.5 FTE)

Contract Services
To jumpstart this project, we propose to engage consultants with significant expertise in this
area.
 Business architecture consulting $50-100k
 Developer community materials development $25-50k

Technology Support
The Technical Team is intended to report into the business team. This is a departure from our
outsourcing approach, but given the highly technical nature of this space, we feel strongly that
having dedicated resources and a direct reporting relationship will ensure success and speed
to market.
 Architect (TBD)
 Developer/Documentation Developer (TBD)
 Developer/Coder (TBD)
 “Developer in Residence” drawn from field staff (rotating monthly assignment)

Technology Strategy/Approach
FY09 plan is to leverage third parties to gain speed to market and learn from previous
experience. We are also looking to BBTG to provide a perspective on FY10+ implementation
strategies
 Data Supply (Channel Intelligence) $50k setup, $5k monthly
 Web Services Platform (Mashery) $50k setup, $10k monthly
 BBTG perspective development for Web Services/Open APIs ($TBD)

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Proposed Capability Set
We have developed an initial list of target capabilities to be delivered based on competitive
analysis and our current understanding of developer requested features. As we proceed
through the project, the specifics will be modified based on the availability of data, developer
requests, and the team’s ability to put the data into a usable form. There are three priorities for
API development:
1. Meet minimum standards for entry to the market
2. Provide differentiation for Best Buy compared to other e-commerce sites
3. Match competitive offerings
The target set of capabilities for Release 1.0 includes the following items:
 Detailed Product Information – provides a formatted data record with product name,
manufacturer, description, price, and availability based on upon a request that specifies
a specific SKU or exact name match
 Customer Ratings – For a particular SKU, any customer rating information
 New Releases – A list of SKUs for new product releases
 Product Images – If available, a thumbnail, small, or large product image URL for a
requested SKU
 Shipping cost calculation – based upon the recipient zip code, the anticipated cost of
shipping a given product according to a requested shipping method
 Related products – based on a SKU, other products that are similar
 Local Store information – based on a Zip code or city and state specification, information
regarding nearest stores
 Store/SKU availability lookup – based on a specific SKU and Store ID, the availability of
a product
 Best Sellers by product category – How products within a given product category are
ranked based upon total sales
 Sales and Promotions – a list of SKUs for special offers
Examples of applications that could be built using the functionality in Release 1.0:
“Find it Now” widget – an online community dedicated to digital cameras could display
information at the top of each forum on the current prices for given cameras under discussion
and a customized local store availability based on a logged in user’s zip code.
“Hot Products” widget – a site which reviews video games could show a top ten list of video
games for different consoles, and allow visitors to get more information about these games,
their availability, price, etc.
Future releases may include:
 Popular Searches – a list of the products most frequently being searched by Best Buy
visitors.
 Product Search – exporting BestBuy.com’s robust natural language search capabilities
for use in mobile or other applications
 Customer Reviews – Access to a set of reviews of products written by customers
 Product Recommendations – On a product category basis, the most recommended
products

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  Similar Product Suggestions – based upon a request for a specific SKU, a suggestion of
a similar product which may be less expensive, more highly recommended, or available
when another is not

API Release Schedule

Our intent is to build the capabilities in partnership with our developer community. We will
simultaneously be evolving the services offered, the format of the data and the ability of the
service to sustain traffic, targeting a general public release in September 2008.
Product releases will be delivered incrementally – staged through existing data feed/ARIES
partners, a group of internal corporate developers, a broader group of BBY employees, a
broad set of external partners, and then a general public release. Public release will also be
elevated through an Alpha, Beta, and GA (general availability) stage.
The following dates are aimed at a September release and assume an immediate start:
 March 31st – Version 0.1 – existing data feed partner “pre-alpha” version
 April 14th – Version 0.2 – initial corporate developer volunteers
 May 26th – Version 0.3 – a broader group of BBY employees
 July 14th – Version 0.4 – broad external partner release
 August 11th – Version 0.5 – public "Alpha" release
 September 8th – Version 0.6 – public "Beta" release
 September 29th – Version 1.0 – public general availability (GA)

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General New Business Ventures/Models: Best Buy has the unique opportunity to
participate in emerging business models by leveraging global networks and strategic partners
early on in the investment cycle. Participation early on in emerging business models allows
Best Buy to hold the stake in the game and capture the economic value in unique ways. Three
examples of such plays are active to date and require partnership and support from Best Buy
Capital, Digital Business Group, and Operating Groups. Three active investment options
include: Purple Wave, Fixya, and Fon.

Definition: Purple Wave provides a unique opportunity to increase at risk recovery, access
new customers, new categories, and new markets through a hybrid internet live auction model.
After 5 pilots in Kansas, Dallas, and now with Pacific Sales, Best Buy has captured learnings
and greater recovery by utilizing this adaptive new business model and capability. Next steps
include providing Purple Wave $1M in bridge funding serving as their Angel investing prior to
Summer ’08 formal second round.

Fixya provides Best Buy the ability to participate in an existing community online to deliver
crowd sourced tech support, test the “free to fee” online community business model, and
understand what capabilities are required to deliver online support and service long term. Fixya
completed second round funding as of March 18th and secured $6M. Fixya will entertainment
an investment stake with Best Buy if interested. Growth has been explosive based on
customer response. As of Dec ’07, Fixya reported 3.6 Millions unique users per month to 6.5
Million unique users per month as of March ’08.

Fon provides the largest community based WIFI offering in the world. Fon holds dominate
presence outside of the US but expressed a desire to partner with Best Buy for North America
Launch. Currently Fon has completed second round of funding but is in active discussion with
Best Buy to participate in an informal strategic round.

Resource Request and Investment- Potential investment play discussions under way
led by Bestbuy.com & Best Buy Capital. Formal resource needed to support Purple Wave
activity through the Enterprise approach to secondary markets.

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 Appendix IV
Additional Information

Mobile Applications: Detailed Business Case

Connect4
Consumers
Solutions
Stores
Summary “Connecting Best Buy for the Future”
Associates

Mobile access to key information to provide an in-store tipping point and increase
conversion, drive store traffic and transactions with store locator tools, capture new
transactions outside the store
Benefits Model FY 2009E FY 2010E FY 2011E FY 2012E
Mobile Applications Benefit Summary
For m.bestbuy.com Only

Total Incremental Marketed Demand $ 2,493,635 $ 13,922,507 $ 67,001,973 $ 97,073,320

Total Incremental Net Revenue $ 2,281,676 $ 12,739,094 $ 61,306,805 $ 88,822,088

Total Incremental Net Margin $ 538,476 $ 2,961,191 $ 14,250,713 $ 20,646,616

3rd Party Creative Development Cost Reduction $240,000 $240,000 $240,000 $240,000

Expenses
Headcount $ 275,000 $ 275,000 $ 275,000 $ 275,000

Variable Headcount $ 218,400 $ 224,952 $ 231,701 $ 238,652

Operating Expenses $ 48,000 $ 48,000 $ 48,000 $ 48,000

Capital Expense $ 50,000 $ - $ - $ -

Market Research $ 20,000 $ 20,000 $ 20,000 $ 20,000

Professional Services $ 150,000 $ 100,000 $ - $ -

Travel Expenses $ 10,000 $ 10,000 $ 10,000 $ 10,000
Advertising Expenses $ 50,000 $ 50,000 $ 50,000 $ 50,000
Variable Expenses $ 79,859 $ 445,868 $ 2,145,738 $ 3,108,773
Total $ 901,259 $ 1,173,820 $ 2,780,439 $ 3,750,425

Net Benefit (Annual, Not Discounted) $ (122,783) $ 2,027,371 $ 11,710,274 $ 17,136,192

Net Benefit Low (-15%) (Annual, Not Discounted) $ (104,366) $ 1,723,265 $ 9,953,733 $ 14,565,763
Net Benefit High (+15%) (Annual, Not Discounted) $ (141,201) $ 2,331,477 $ 13,466,815 $ 19,706,620
Assumptions/Notes:
• All benefits are for m.bestbuy.com and do not include other mobile applications that may be added to the
portfolio during the duration covered by the model
• \Underlying baseline, conversion, AOV, and Margin Rates are based on current DotCom actuals provided by
Best Buy Finance and BestBuy.com Customer Experience Team
• Benefit includes cost reductions related to ‘in-sourcing’ mobile campaign page design from Avenue A

DRAFT Confidential - Do Not Disseminate or Copy 1

Emerging Customer Channels 33 of 35 4/22/2018– M. Azar, B. Hedrington, K. Matheny, S. Mcintyre,

Emerging Customer Channels 34 of 35 4/22/2018– M. Azar, B. Hedrington, K. Matheny, S. Mcintyre,
Emerging Customer Channels 35 of 35 4/22/2018– M. Azar, B. Hedrington, K. Matheny, S. Mcintyre,