Best Buy's Business Model

By Megan McArdle

From our comments:

I have the Amazon app on my iphone and I've compared prices in the store many times. For books, you just have to put in the ISBN, and it's not that tough for most electronics.

Compared with Best Buy, Amazon saves TONS of money on anything small. Best Buy's business model seems to be competitive prices on TV's and computers, but then earning huge margins on Ethernet cables, HDMI cables, keyboards, converters, etc. There's also not much other choice for me for these items for brick-and-mortar, at least where I live.

Compared to books, Amazon doesn't save as much for newer titles if you get bestsellers. But they also save a ton of money on older titles

Which of course makes perfect sense.  A television is a considered purchase; people shop around.  Lots of people don't know to shop around for cables, and even those like me, who do, find ourselves running to a brick and mortar retailer because there's an emergency.  When the ethernet cable connecting my wireless to my cable modem has gone out, I don't really want to wait 48 hours for Amazon Prime to deliver (or even ship it overnight); I want my internet back up NOW.

This article available online at:

http://www.theatlantic.com/business/archive/2010/10/best-buys-business-model/64193/