Viewing entries tagged
Best Buy

Perplexed by Best Buy

I'm perplexed by best buy. Terrific customer service, convenience and return policy (30 day, return anything - no questions). But high pricing (see hdmi cables and blu rays) and limited inventory (other than tvs).

Perhaps consumers are getting more savvy (thanks mobile) and more price conscious (thanks economy) and less convenience needy (thanks amazon prime).

Why Best Buy is Going Out of Business... Gradually

Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.

Those are just some of the numbers, and they don’t look good. They bear out a prediction in March from the Wall Street Journal’s Heard on the Street column, which forecast “the worst is yet to come” for Best Buy investors. With the flop of 3D televisions and the expansion of Apple’s own retail locations, there was no killer product on the horizon that would lift it from the doldrums. Though the company accounts for almost a third of all U.S. consumer electronics purchases, analysts noted, the company remains a ripe target for more nimble competitors.

But the numbers only scratch the surface. To discover the real reasons behind the company’s decline, just take this simple test. Walk into one of the company’s retail locations or shop online. And try, really try, not to lose your temper.

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Amazon Kindle Fire: $199. RIM Playbook: $299 after 40% Discount.

There are several reasons why Amazon's new Kindle Fire - and the larger Kindle line - is disruptive (my take here). For non-Apple tablets, the Kindle Fire is much more than disruptive: it's killer.

Proof is right here. Below is Best Buy's huge discount on the RIM Playbook ($299 sale, normally $499). Despite that 40% discount, the Playbook is *still* 50% more expensive than the Kindle Fire. And that's before you begin comparing the two devices... I would pay a premium for the Fire vs. the Playbook.

Product is clearly important. But for mass consumption, price wins. And Amazon has won the non-iPad market by radically undercutting it.

Innovating Around the Check-Out Rather than the Check-In

Couponing is a hot space and companies are finding success from different angels: Groupon for local deals, Foursquare and Facebook for check-in promotions, Shopkick for in-store 'gaming', etc. But the reward / redemption remains clunky and, rather than the check-in, we need innovation around the check-out. Here is a good example. I received the below Best Buy Rewards Card via my email - I have $35 of Reward Zone credits.

So I visited Best Buy to redeem it... with only my iPhone and the email. In theory, that should be enough - after all, Best Buy sent the email and it includes my Reward Zone number, which is sitting in their system (which cashiers and employees can access by name, phone number, card, etc).

But the cashier could not access the point balance at the register and could do not apply the coupon without having a hard copy of the certificate. She pointed me towards the computer section and had me use a public machine to print the coupon (this process required manager supervision and took 5-10 minutes). With paper in hand, I went back to the cashier and restarted the check-out process.

There are several ways to imagine a crisper process for the consumer and company. Of course the trouble is integrating across various systems that, for various reasons, do not speak to each other... That's the challenge and that's why focusing on the check-in is only part of the solution.