Monthly Archives: June 2011

Ouch – News Corp sells MySpace at a $545m loss…not a good ROI

Yesterday, News Corp announced it had finally unloaded the asset, MySpace to Specific Media for a whopping $35m! I think the equity valuation for the interns at Facebook might be worth more than that. That represents a $545m loss on the amount News Corp doled out in 2005 for, at the time, #1 social media site. Rupert Murdoch certainly did not bargain for this in 2005 when he thought he was filling out his media giant with the missing piece – social, which at the time was loosely defined as online communities. I am sure the father of Fox News is not smirking today as he absorbs a lovely 93% loss on his original investment and he really is no further ahead in the game when it comes to tying social channels into his portfolio, than he was in 2005.

So what happened? To me this feels very similar to when Time Warner and AOL decided to tie the knot. At the time you had an “old school” media company, Time Warner, associating its vast empire of assets with the new media kid on the block – AOL. What it represented was a company trying to latch on to the dot com craze of the time. Much like the News Corp – MySpace move, it also ended bitterly and not how any of the parties envisioned it ending. What lessons can we take from these?

  • Acquisition is not always the answer for entering new markets. Time Warner and News Corp both might have been better served in growing online and social assets organically. Rather than acquiring a new technology company look to poach some of their personnel and give them the tools to develop organically. I cannot see companies such as News Corp and Time Warner having the appropriate cultures to allow the new kids on the block to continue to flourish.
  • The deal you walk away from is just as important as the one you embrace. Groupon pointed to this as to why they turned down the whopping offer from Google. Funny how Google is viewed as potentially stifling environment! While the half billion in cash looked good to the MySpace team, it is peanuts compared to what Linkedin hit in valuations after IPO and what is predicted for Facebook’s IPO. Granted no one could predict what would have happened with MySpace had they stayed independent, hindsight is 20/20.
  • Timing or luck or something else? “Luck is where preparation meets opportunity.” MySpace used to be the #1 social site. What happened? Luck? Opportunity? Or combination of all of the above. Interesting how the explosion of sites like Facebook coincide with the rise of the iPhone and better smart phones. In 2005, our social experience remained tethered to our computers. Yes blackberry was around and some of us had Treos or other version of a smart phone, but where were the apps? And no wide spread Wifi…Maybe it was bad timing for the likes of MySpace, but that is the Darwinian reality of business and high tech.

So the page turns for MySpace, not sure what the future holds for the one time front runner. Could they follow AOL and redefine themselves? Or will the go the way of Friendster and fade away to background of social media?


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Sports and the supply chain – follow the hot team

Okay maybe this is not 100% about supply chain management, but it is an interesting case of event management and modelling signals. A recent airline issue made me think of the impact sporting events have on load balancing for airlines, hotels and other associated service providers. This all trickles down to their supply chain. For example: this weekend the Red Sox are traveling to Pittsburgh to play the Pirates. On a sporting level this appears to be a lopsided affair. The Red Sox payroll – $161m…Pirates $46m, almost 4x difference. Since the last time the Pirates made the playoffs – 1992 – the Pirates have…not had a winning season while the Red Sox have been perennial contenders, including 2 World Series Titles. So why is this important for your supply chain? The three game series this weekend in Pittsburgh will see a large uptick in travel from the East Coast to Pittsburgh, impacting air travel, hotels, road ways even rail.

Companies that touch associated business ventures need to keep this in mind for their planning and execution. Airlines will have to restructure some of their routing to accommodate the increase passenger load, hotels will have to price adjust since demand will spike, restaurants and retailers might need to increase their deliveries and inventory levels to meet potential demand. This economic impact is always highlighted when it comes to the big sporting events: Soccer’s World Cup or European Cup, the Winter and Summer Olympics, the Super Bowl to name a few. We cannot discount the similar impacts of “smaller” events such as the Red Sox playing the Pirates, or when Steeler fans travel, or Yankee games…just to name few.

Maybe companies should watch which teams have Grateful Dead like followings and adjust their supply chains accordingly

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Sports and your supply chain – how a 39 year wait can impact your supply chain


Those of you who are no hockey fans or those that scoff at the Boston Bruins bandwagon, might not realize that Bruins ended a 39 year drought by winning the Stanley Cup this past Wednesday. They defeated the Vancouver Canucks 4-0 and won the title 4 games to 3, setting off an entire regions joyous celebration. What it also did was send retailers scrambling for that coveted championship merchandise. As has become the custom, merchandise companies will produce championship hats, t-shirts and other gear for both teams that find themselves in the finals. How else does the winning team have the appropriate accoutrements seconds after the final whistle is blown? Of course that means that there is equal amounts of paraphernalia emblazon with the losing team’s likeness, but with “Champion” associated with that team’s logo. Which of course is merchandise with a value of zero, many times that gear is donated to charity….hopefully far from where the losing team resides!

Of course anyone in the greater Boston area and I would argue in all of Massachusetts probably all of New England can attest, getting your hands on a locker room t-shirt or hat is close to impossible. I just went to an Olympia sports (a local sports retailer) where the Bruin’s Stanley Cup section looked like the bread aisle in 1949 Soviet Russia – bare. There was not even a hint of standard Bruin’s gear. I actually saw some of this locker room gear at Paper Source…not exactly where one would expect to find it, and even there the only shirt they had was XXL. Stores are reporting fans waiting in line for 3 hours to get a chance to purchase the goodies, stores are going through their entire inventory within hours of receiving it one store reported selling $5,000 worth of merchandise in the first 2 hours! I remember back in 2004 when the Red Sox ended their 86 year curse and won the World Series – the lines for merchandise were monumental, even the local newspapers faced spikes in demand for their papers and could not keep the newspaper distributors stocked with the edition of the day.

For companies like Reebok, Dicks Sporting Goods, Moddells, and all the other distributors this would all seem like good times. Long lines of fans, who demand very specific merchandise, are most likely not going to be price sensitive and will tolerate stock outs. Yet, all is not rosy. Why? What about all the fans that walked out without that $30 championship hat, will they go back and get it? Some did purchase other related products, but not necessarily a Reebok product or one at that price point. What about getting their hands on the other championship specific merchandise? How much revenue might have these companies left on the table not being able to keep inventory levels at pace with the demand? What about the secondary level of demand – a fan might not be able to get a Bruins’ championship shirt but if there is a Bruins’ team shirt might they purchase that? Does the store have the proper inventory levels? Add this layer of complexity: player numbered shirts.

According to reports the Tim Thomas and Brad Marchand shirts are the most coveted. Makes sense for Tim Thomas – he was awarded the Conn Smythe trophy for the most valuable player. Marchand has achieved cult status for his play, toughness and scoring all as a rookie and all as a player that based on physical stature, one would not assume is a professional athlete. How could one predict those demands? What about Chara or Bergeron shirts? Chara being the captain and Bergeron having scored 2 goals in game 7 (so did Marchand). Again, no clean way to anticipate those demands.

Finally add two more events that impact the supply chain – the duck boat parade in Boston today and Father’s Day tomorrow. Many fans stated wanting gear to wear at the parade, while I am sure Bruins’ gear became a coveted gift for many fathers’ in the region. Again, two events that spiked the demand. So now what? Does Reebok and others crank up their production machine to restock shelves? Or do they assume that the window has closed – the highest demand coming in the first 3 days post event. But what if that rule does not apply to this situation? The Bruins are a storied franchise, being one if the original 6 NHL franchises. New England is not your typical sports region. Could demand remain strong for weeks? Months? Do the merchandisers have to shift resources to meet this potential demand or stay the course hoping that the consumer is flexible with timing: they want the gear and are willing to wait for it. Or do they need to strike the iron while it is hot, as I stated before the New England region is a unique sporting market and the Red Sox are a looming monster when it comes to commanding the fan’s attention.

For retailers that are involved in championship merchandising these events pose a great challenge. How to monitor the level of demand for their goods and what is the length of the peak demand. How does the region and team influence this demand? I have a feeling the demand for merchandise was very different for the Tampa Bay Lightening when they won the Stanley Cup in 2004 as it was this year or even last season when the Chicago Blackhawks ended a long cup drought themselves (they are also an original 6 team). Merchandisers have become more savvy with getting product in the hands of their fans, but the wide spread stock outs are an clear indication that much improvement could be had. I am sure fans’ want to get their hands on more product while the merchandisers want to capture more revenue associated with these demand generating events.

Maybe a demand signal needs to incorporate stature of team and time since last championship!

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Lets go BRUINS!!!!

Lets go Bruins!!! All comes down to this.

What it means to be a fan, click here.

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Best Buy and social listening – customer service part II

So in my last post I did a little venting about my experience with the Best Buy customer service. After sitting on the phone for over 45 minutes and no resolution, I actually went to the Best Buy location and walked around until I found the appropriate folks to assist me. Now I will say that the car installers (I was having a radio installed) were professional and very courteous. But even they told me that they had informed the folks manning the customer service desk that if I called, to inform me that the part I had ordered was in and I could bring my car in for service. That would have been nice…if they picked up the phone!

My next option…being a good social marketer…was to vent directly to Best Buy via twitter: @BestBuy @BestBuyCMO. Again to Best Buy’s credit, @Coral_BestBuy reached out to me via Twitter. I shared my experience and was told the situation would be looked into and my complaints relayed to the Best Buy in question. I will wait to see if the suggestions will be taken to heart, however I at least have some closure that my complaints were heard and addressed. This is a simple example of why companies and consumer brands must take social marketing seriously – meaning don’t simply give this job to someone who already has a full time gig or simply look for a stop gap solution aka an intern.

B2B companies must not look at this and say “well Best Buy is a B2C company and need to be more aware of this channel…” Wrong answer. B2B must be jut as tuned in to the social channels as Best Buy. For example, I recently attended a Gartner conference on supply chain….yawn for some of us, very exciting for supply chain folks like myself! What struck me was that Gartner was very lax on their tweeting from the event, really did not seem to have given it a thought. Why does this matter? They were not influencing the discussion on Twitter, not responding to what attendees, such as myself, were tweeting and discussing. Rather than promoting a Gartner tweet as the “go to” source for updates from the conference, folks were promoting individuals (not affiliated with Gartner) to get insight into what was happening. Now, that is a good thing – independent attendees giving their thoughts, but Gartner needed to have a voice in the conversation. Had they been more aware and more active with what was being said, they could have created a residual effect and thought promotion from the content they were disseminating during the conference. While I did not see anything negative being tweeted, Gartner lost an opportunity to push content and thinking via social. Missed opportunity.

Kudos to Best Buy, they understand the importance of watching the social channels. We still have a long way to go before more companies recognize the importance of this channel.

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The opportunity cost of customer service – the good, the bad and the ugly

I am sitting on hold with Best Buy, a retailer I tend to have good experiences with, except when it comes to customer service. I have purchased a LOT of goodies from Best Buy over the years, from flat screen televisions, laptops, DVDs, Blu Ray players, video games, consoles, phone accessories…you get the  picture. I am technology grabber and do a lot of grabbing at Best Buy. For the most part the experience has always been good. They have a lot of inventory and selection to appease my technology addiction. Their prices are competitive. However when it comes to service after the sale, there is something lacking. I have also leveraged their Geek Squad services, for the most part the experience has been adequate but by no means exceptional. A few examples, and I realize some of this might sound like belly aching…which it is, hey why do I write a blog if I cannot use it to vent from time to time!

  • I brought a television, purchased from Best Buy, back after a year when the picture went dead. Of course I did not have he receipt anymore so they were “limited” with what they could do…hmmmm ever think of keeping a digital copy of receipts for your clients, especially those who are members of your reward program? After telling me they would farm out the television to determine what could be done to fix it, I was put in a bit of a black hole. No idea when I would get a response. A few weeks later I get a call from someone, not Best Buy, telling me that my television would need $500 repairs…not worth it. So I told them no thanks. Of course the television gets returned to Best Buy where I told them to dispose of it as they saw fit, what was I going to do with a dead television? I realize that some might take it to another repair center to see if someone else could solve the issue, but give the customer the option. I am sure Best Buy has an after market business, why not offer consumers an option – you do not want to service the product, do you want to take it back? If not we will dispose of it and give you a 10% off coupon if you purchase a similar product within our stores in the next 30 days. Drive some sales! Make the consume happy, and not feel harassed to come back and lug a piece of electronics that will most likely end up in a land fill somewhere. Instead Best Buy can dispose of the electronics in an appropriate manner and drive some sales.
  • Another example: my car stereo went kaput. It would cost me way too much to replace it via my car dealer so I purchased a car radio via Best Buy and had their installers put it in. So far so good. Except when it was discovered that we needed another piece for the antenna…I was not getting AM radio and poor FM reception. Uh oops. I head into Best Buy and the technician is very helpful at identifying the problem and ordering the appropriate part. I am told that I will be receiving a call once the part arrives and to schedule the install. Unfortunately that puts me back into a black hole. Radio (pun intended) silence. Has the part arrived? Can I schedule my next appointment? Have I been forgotten??? Of course when I call Best Buy I get put on hold, sent to an extension that does not pick up nor has voice mail or speak to someone who clearly doesn’t do what it takes to assist. I was told – “Um oh the parts person will call you…” no call, at least no voice mail to tell me they called. So now I am stuck waiting and playing phone games. By the way, have been on hold this entire time I am writing this post! Maybe Best Buy could automate this via the web…how is that for a novel idea? I could log on, as I am rewards member, and see where my part is and even, gasp, schedule an appointment based on the technicians’ availability.

These are just two examples of where Best Buy has fallen short in my eyes with customer service and after market handling. As technology is fast moving – the cycle times of new product introduction is shrinking. So what? If the distributor of that technology can provide good after sale service I will be willing to spend more money on higher margin items: installs, training, servicing and replacements. Let us look at another technology player – Apple – and what they do.

  • I purchased an iPad last September and had to go to San Francisco for an event…on the flight the iPad went dark. Ugh. What did I do? Went to the Apple store with my sick iPad, after a short wait (there were a lot of people at the Genius Bar and I was a walk in) I was met with a personable technician who looked up my information (I bought the iPad at a Best Buy…the irony). He told me that they would take care of the problem, and simple swapped out my iPad with a brand new one. Problem solved.
  • I have had to replace 2 iPhones, again simple phone call, time schedule with the Genius Bar. New phone. Problem solved.

Now I realize that Apple stores’ inventory is on a very different scale than Best Buy, however the service and process does not have to be complicated simply because of inventory issues. Apple will continue to get my business, granted they also have outstanding products, but knowing that I can walk into any Apply store in the world and have my products serviced is an incredible value add. My iPhone has issues and I am in the middle of Paris? No problem I go to the Louvre Apple Store and have it fixed. The same cannot be said about the likes of Best Buy. Which is surprising, Best Buy should know how important that customer life time proposition is for any electronic distributor and vendor.That is the reason they acquired Geek Squad! They knew that services is where the money was to be made.

Fix your problem Best Buy, otherwise you might suffer the same fate as Circuit City. With the likes of WalMart and Target competing on price and Apple of service, Best Buy must defend their position and provide exceptional service.

Oh and I am still on hold with Best Buy…that is 45 minutes, 48 seconds! #fail!!!

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