Is Amazon Responsible for Best Buy's Weak Earnings?

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Earlier today Best Buy reported that its third quarter earnings missed expectations. This might seem surprising, since Circuit City, which was one of the firm's major competitors, is no longer a threat after declaring bankruptcy last year. But Louis Bedigian at Benzinga argues that Best Buy's problems are not with its retail stores, but with its online presence, as that's the segment of its earnings with lagging growth. Bedigian argues that Best Buy hopes to compete in the online market, it must improve to be more like Amazon, which may be capitalizing on Best Buy's flaws:

Simply put, Amazon offers more options than any other site. In addition to its own warehouse of items, the company allows other (and often independent) organizations to sell their items on Amazon.com. This gives consumers a plethora of additional pricing and availability options when shopping online.

At this time, Best Buy cannot be expected to do the same. But if it wants to survive in this highly competitive market, management must realize that item variety, availability, and website usability are three of the key ingredients necessary to design a successful dot-com.

Read the full story at Benzinga.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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