Homer II

Are Best Buy's Earnings a Warning?

I recently purchased a large flat-screen TV from Amazon. It was $85 cheaper than the lowest price in my city which has BB, CC, and several other outlets. Shipping was free and included a service man contracted locally by Amazon who delivered and installed it, checked for damage or defects before leaving. Beautiful! Couldn't be any easier. I never left the house to look at the stores. The pesky sales types make appliance shopping a dread.

Best Buy Reaction Could Reflect Sentiment Change

BB is beating a dead horse: walk-in sales traffic. More and more people are shopping over the Internet due to better prices, free shipping, better selection. And, the Internet sales can skip past most state sales tax collections. (they can in my state) More knowledgeable consumers scan the Internet warehouses (Amazon, Newegg, etc.), plan their purchases, and sit back comfortably at home waiting for Big Brown to roll up to the front door and unload their packages.

Less Buying at Best Buy

The biggest threat to BB is their model: bricks and mortar. That is a big expense anchor to lug around when others like Amazon, Newegg, etc. just run huge warehouses and slick database-driven websites. I know: BB has a website too. But it is clumsy and yet primitive compared to the former two. As walk-in traffic dwindles and impulse-driven spenders recede, the web-based models with their better prices, will continue to eat into BB's market share.