Best Buy changes its policies in a last ditch effort to defend itself against the big bad Internet
Just about every tech savvy consumer is guilty of it, but few choose to admit it. We see a product online, we fall in love with the features and price, but for some inexplicable reason we simply must fondle it in person before buying. Best Buy has often dismissed the showrooming phenomenon when speaking to shareholders during earnings calls, however it’s hard to sugar coat the reality that Amazon can easily offer lower prices without the constant drag that a brick and mortar store has on the bottom line.
HP didn’t do much with the Touchpad, but they did at least prove that there is a healthy market out there for a $99 tablet. RIM isn’t quite ready to go that crazy with its struggling Playbook just yet, but they have started to test the waters. Last week RIM dropped the price of each model of playbook by an even $100 in Canada, and also began offering an additional $100 gift card at two of the country’s biggest brick & mortar retailers, Future Shop and Best Buy. How has it been working out so far? Both retailers are reporting they are officially sold out.
We are willing to bet that the Intel Sandy Bridge chipset flaw impacted Maximum PC readers more than just about anyone else out there, but a group of Best Buy representatives contacted by CNET also feel particularly hard done by. As one of the biggest PC OEM retailers in North America, Best Buy claims it was ready to go with print advertisements, and was already deep into new product training by the time the problem was discovered.
In a note to investors this week, Wedbush analyst Michael Pachter said it's going to be increasingly difficult for Best Buy to compete with online retailers, CNet reports.
"We expect continued market share losses in consumer electronics to online retailers and lower-priced big-box competitors, and entertainment software to Gamestop, Amazon, and Wal-Mart," Pachter wrote.
Best Buy recently posted weaker-than-expected sales in a number of categories, including TVs, PCs, and videogames. Sales were down 3 percent from a year ago, though the brick-and-mortar electronics chain still made a profit of $217 million on almost $12 billion in revenue.
That means Best Buy doesn't have to go into panic mode just yet, but it should look to alter its strategy. According to Pachter, lower prices online undermine Best Buy's "widest selection of goods at premium price points."
Even if you don’t shop at Costco, chances are if you live anywhere in North America you’ve at least made eye contact with one of their monolithic warehouses that line the sides of almost every major highway. Costco’s footprint makes them the third largest retailer in the United States, but even with all that negotiating power it appears as though they may be considering the atomic option to get back at Apple for refusing to let them carry the iPad.
According to anonymous sources quoted by iLounge, the company has intentionally pulled all iPod hardware from its Costco.com website, and will slowly deplete its retail stock before dropping the lineup altogether. This might sound like a fairly harsh recourse, but it likely has more to do with the fact that rival outlets including Target, Wal-Mart, and even Sam Club will all carry the device going into the holiday season.
If this story is indeed true it will be interesting to see if Costco has the power to bully Steve Jobs into submission. I imagine we have quite a few readers out there that would love to see him eat a piece of their Kirkland branded humble pie.
Amazon keeps the exact number of Kindle’s sold under wraps, but since we know it been the bestselling item on the website for two years running, it’s not hard to imagine that it leads the pack in the e-reader market. The Nook was slowly nibbling away at its market share prior to the price cut, but the only real advantage competitors had left was a presence at brick and mortar stores, something Amazon is finally going to change.
Best Buy & Staples will be getting all three Kindle variants heading into the fall giving consumers a chance to test Amazon’s best against the Nook, Sony Reader, and several other lower end e-book devices. This isn’t the first time the Kindle has hit retail stores, but it is a first for this generation of device. Placing the Kindle in the retail channel is understandably a difficult decision for a company that has built its entire business model around selling via the web, but one that ultimately can only help move more devices.
The decision is likely a result of the Kindle team being divided into two parts, one devoted to selling books and the other to selling hardware. Each team can make decisions to further each section of the business without worrying about the impact on the other end. Giving consumers a chance to check out the Kindle in person is a wise decision, and one that will likely pay off well going into the holiday season.
No official date has been given for stock to arrive at either Best Buy or Staples, but we imagine this is a result of the current backorder situation on the website.
We received word today that Best Buy is expanding its in-store eReader selection to include Amazon's Kindle. This will make Best Buy the only brick and mortar retailer to sell all three major eBook readers, which also includes B&N's Nook and Sony's Reader family.
"There's no question that eReaders have found their rightful place in today's digital lifestyle," said Chris Homeister, senior vice president and general manager of Home Entertainment for Best Buy. "Our goal is to help people choose the device that's right for them by providing the broadest selection of popular eReaders of any retailer, in one convenient place that enables people to easily see, touch, try, and buy."
The Kindles will show up in stores sometime this fall with pricing the same as through Amazon: the new Kindle with built-in Wi-Fi will sell for $140 and the Kindle 3G will go for $190. Later in the season, the Kindle DX will join the fray.
Congestion problems on AT&T’s network, particularly in New York and San Francisco are no secret, but the solution they are choosing to help alleviate the strain is a tad unorthodox. It appears as though AT&T may be voluntarily restricting sales of the iPhone to New York residents on its website. Considering that New Yorkers can still march over on foot to any AT&T store, I doubt this will accomplish much, but what makes this story particularly interesting is the answer consumerist.com received when talking with an AT&T customer service representative about the issue.
Daphne: Welcome to AT&T online Sales support. How may I assist you with placing your order today?
Laura: Hi, I was looking at the iPhone 3Gs and the system tells me that I cannot order one in my ZIP code. My zip code is 11231. (Brooklyn, NY) Is this true? Are iPhones no longer available in New York City?
Daphne: I am happy to be helping you today . Yes, this is correct the phone is not offered to you because New York is not ready for the iPhone.
Daphne: You don't have enough towers to handle the phone.
Laura: Thank you for your help. So the phone is not available to people anywhere in the city?
Daphne: Yes this is correct Laura.
So far we haven’t heard anything official from AT&T on the matter, but if the statement “New York is not ready for the iPhone” is the company’s new official tag line, well, lets just say the Verizon ad writes itself.
Sales tax aside, how cool would it be to pick up your Amazon.com order locally instead of waiting for your items to ship? According to recent rumors, that's a very real possibility, provided you reside in the U.K.
The Times Online in London says Amazon "has launched a secret search for brick-and-mortar stores to support its rapidly growing website." The online mega chain is said to be searching for high-profile locales while the Borders book chain is shuttering its doors.
"When Amazon was just selling books and CDs that fitted easily through the letterbox it was fine to be a web-only business, but now it has branched out into everything from children's bikes to electricals it believes it could boost sales by having stores that offer a collection point for shoppers. It will probably be an Argos-sytle operation," said a source familiar with Amazon's proposals.
It sounds risky to move from the web to the street, but if anyone can pull it off, it would be Amazon. During the credit crunch, Amazon defied Wall Street forecasts with a 28 percent surge in sales to $5.5 billion. The company's value has never been higher, including during the dotcom era.