Best Buy, Amazon Converge

Wednesday, July 19, 2017

The Los Angeles Times carries a story about why Best Buy, which looked like it would succumb to Amazon only a few years ago, has returned to profitability. The strategy looks like an interesting mix of (1) better exploiting any advantages they already had over Amazon, (2) eliminating any advantage Amazon had that they could do something about, (3) learning new ways to serve customers from Amazon, and (4) devising new ways to outdo Amazon.

One of the first moves by Hubert Joly, appointed CEO in 2012, was to match Amazon's pricing. This both eliminated one of Amazon's advantages and turned "showrooming" into an advantage for electronics customers: They could look at potential purchases and even get advice from a human being -- and then not have to wait for delivery. But Joly very wisely didn't stop there:

"We don't see ourselves as a brick-and-mortar retailer, we're a multichannel retailer" that combines the stores, Best Buy's website and its phone app to boost sales, Joly said in an interview. And he's planning to expand Best Buy's services, including its Geek Squad support arm, to generate more product sales.
Joly makes Amazon sound one-dimensional to me, here, and it is clear that I'm hardly the only one to have noticed. The article later mentions something I'd already been hearing about off and on lately: Amazon's forays into brick-and-mortar stores and customer service. Like Sears before it, Amazon is hardly killing retail: It and its successful competitors are revolutionizing it.

-- CAV


Anonymous said...

Hi Gus,

Though I do use Amazon a great deal, I'm more likely to buy a big ticket item or an instant gratification item from a local store. But I do the the opposite of the 'Showroomers'. I go online and look at the customer reviews and then head to Best Buy or Barnes and Noble, particularly if the weekend is coming up and I don't have anything new to read or watch. (That's the instant gratification part. Don't want to wait for delivery some time next week.)

I like that point about Sears (catalog) revolutionizing retail. Sears was the late 19th early 20th century version of Amazon. I made this same point to my older brother who tends to be somewhat anti-Amazon because of their impact on the local brick and mortar stores. I pointed out that the general stores of yesteryear probably weren't all that happy with the Sears Catalog (very likely taking great joy in its secondary use in the outhouse) or the delivery service of Wells Fargo. But their erstwhile customers apparently were very happy.

c. andrew

Gus Van Horn said...


I, too, shop in the opposite way from most people when I can. In fact, I've gotten to where I'll use customer reviews even for very mundane purchases. (See Item 3, in particular.)