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Best Buy (BBY): Amazon’s (AMZN) Showroom?

Posted By Invictus On March 25, 2011 @ 12:00 pm In Consumer Spending,Markets,Retail,Technology,Web/Tech | Comments Disabled

Bloomberg television ran a brief segment in which they posited that Best Buy (BBY) has effectively become Amazon’s (AMZN) biatch.  And I think there’s some truth to that.  This is no doubt one of the consequences of a population that walks around with smartphones running barcode scanning applications that allow us to see, touch, examine, try out a potential purchase and then, if it is to our liking, immediately search the web to find its best price — possibly (probably?) elsewhere, and maybe even order it before we leave the site at which we went to go see it in the first place.  Unless it’s an impulse buy — walk in for a $12 thumb drive, walk out with a $700, 50″ flat panel? — why wouldn’t you:

  1. Pay a lower price
  2. Pay no tax
  3. Probably get free shipping
  4. Have your purchase in just 2-3 days

And the proof of the pudding seems to be in the performance:

[1]

I’d postulate this trend is a contributing factor to this news item [2] about weaker BBY sales in general, but which contained this interesting tidbit (I’d guess the sale of mobile devices has a much higher immediate, on-site close rate than, say, digital cameras or other higher-end electronics) :

The chain is also pushing hard to open smaller stores. The company is opening 150 smaller-format mobile only stores by the end of the year, nearly doubling its total to 325.

“We are exploring and redefining what the optimal big-box footprint is for us,” CEO Brian Dunn said on a call with analysts.

And yes, I’m aware of Amazon’s far more diverse offerings — consider this post as applicable only to electronics.

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BR adds: I have been playing with the Amazon PriceCheck [3] barcode scanning app — it spells the end of retailing as we previously knew it . . .


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/03/best-buy-bby-amazons-amzn-showroom/

URLs in this post:

[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2011/03/amzn-v-bby.png

[2] this news item: http://news.yahoo.com/s/ap/20110324/ap_on_bi_ge/us_earns_best_buy_7

[3] Amazon PriceCheck: http://www.amazon.com/gp/feature.html?ie=UTF8&docId=aw_ppricecheck_iphone_mobile

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