No Nano 4 Best Buy China.

On Friday I ran my beloved iPod nano, 2nd gen, through the laundry. Some consolation was provided by the news that Apple had released its much-vaunted 4th generation iPod nano a few days before. So, if I couldn’t have my old one, I could at least have a new and improved one.

The old one, the now water-logged one, was purchased at the first Best Buy in China (fyi: Best Buy is the largest consumer electronics retailer in North America) in a transaction that I recall as being blissfully trouble-free compared to those I’d had in China’s native consumer electronics retailers (Gome, etc), and it’s much-hated, way-too-crowded, e-malls (filled with independently-owned kiosks affiliated with manufacturers) That is, Best Buy didn’t surround me with pushy salespeople, didn’t require me to negotiate, and – best of all – their return policy all but guaranteed that I wouldn’t be sold a cheap counterfeit. Score a sale for Best Buy.

So, this morning, I wandered down to the same Best Buy store (in Xujiahui), walked to the portable music player section, and inquired of the staff as to where I might find a new iPod nano, 4th generation. A salesperson led me to a kiosk that had space (and price tags) for half-a-dozen 3rd generation iPod nanos, though only one was on display. The others had either been removed or sold. In other words: an all but empty nano kiosk.

“When will you get the fourth generation?” I asked.

The clerk consulted with a supervisor and returned to me. “After the October [national day] holiday.” [October 6].

“You mean you won’t have any new ipod nanos in stock for two weeks?” I asked incredulously.

“You can buy this floor model,” he offered weakly, nodding at the last remaining third generation nano. “That’s all we have left.”

I can’t say that I was totally surprised by the exchange: rumors abound that Best Buy’s China retail operations are struggling. And one of the reasons is that consumers have the perception – a true one, in this blogger’s opinion – that the competition has better and newer product selection (e-mall vendors, in particular).

It wasn’t supposed to work this way. Indeed, ever since Best Buy opened its first China store in December 2006, one of the arguments that it has made for its potential success in China is that – because it sources vast amounts of consumer electronics for the US market – it can leverage its purchasing power into unprecedented product selection at competitive pricing in China. But if that’s truly the case, how is it possible that this monster of the North American consumer electronics market is unable to obtain, much less sell, Chinese-manufactured iPods – one of the most successful consumer electronics products of the last decade – for the next two weeks?

Conversely, folks at Best Buy’s Pudong headquarters might be asking themselves: how come the competition can?

Unable to buy a 4th generation iPod nano at Best Buy, I wandered down the block to the e-mall to which Best Buy’s international management likes to compare (favorably) its store environment and services. To be sure, the Best Buy Xujiahui store – any Best Buy, really – is a more pleasant environment than Xujiahui’s jammed, noisy and harsh e-mall. But, in the Xujiahui e-mall’s defense: it has 4th generation iPod nanos in stock, and Best Buy doesn’t have any.

In any event, I stopped into the first kiosk with a visible display of Apple products and asked if they were selling the new 4th generation nano. The salesclerk – who claimed to be the owner of the kiosk – responded with a question of his own: “What color?”

“Silver.”

“Be right back.”

While the clerk fetched the 4th gen nano, I turned and noticed that – behind me – was a display cabinet full of 2nd generation nanos, and 3rd generation nanos – all new, and – in the case of the 3rd generation nanos – available for cheaper than the listed price at Best Buy (which doesn’t have any in-stock, anyway).

So what’s it all mean?

Of course, this is just one datapoint on a long continuum that will determine Best Buy’s success in China. That noted, folks at Best Buy’s international headquarters in Minnesota can’t be thrilled to know that small, vendor-operated kiosks (that is, independently-owned small businesses) in sprawling Shanghainese e-malls are obtaining – and selling! – the latest and greatest consumer electronics products weeks in advance of the North American retail giant’s flagship China store (as of last year, its largest store in its vast international network of stores!). And lord knows how they’re handling the knowledge that the same flagship store lacks any nano stock for the next two weeks, heading into a national holiday when shoppers will be spending. For analysts who follow Best Buy’s international operations, this might be a small – but solid – indication that the company has inventory and/or sourcing issues in its Chinese retail ops. I’m just saying.