How does Best Buy stay in business?

[Brian Elfert]

I was just looking at Best Buy's laptop memory prices which are insane! Sale price on a Kingston 1GB SODIMM is $30 and Newegg sells it for $11! The regular price is listed as $100. Best Buy has a PNY 1GB SODIMM for $75 and Newegg charges $14 for the exact same thing in the same retail package.

I knew one pays a premium for shopping at Best Buy, but paying up to five times as much as online shopping is outrageous.

That said, I am going over to Best Buy in an hour or so to pick up some DVD+R media they have on sale because Newegg only saves $2 and shipping would cost more than that.

[Myk Rian]

I think BB stays in business because they hard sell the warranty/service programs.

[Sonny Edmonds]

You just answered your own question.
You are going over there to buy some media.

Here, there seems to be throngs of people going in and out of our local Best Buy.
Why is beyond me!
I shop and research on the Internet (like you), and usually know more about what I go to actually look at than the Jr. Collage kid trying to show me at the store.
We did a LOT of leg work shopping for our first HDTV. See them actually running and such. If you are after a certain model you can't do just one store because they may have detuned the ones they aren't featuring to make the ones they are pushing look best.
So far, we've bought two from Costco (46" & 40") for the house, and a cheapie RCA (26") from WalMart for the RV, in the last 3 years.
Best Buy? I haven't darkened their doorways in a lot of years. (About 3 now, this time.) They really don't have anything I can't get elsewhere. ;)

[Brian Elfert]

You just answered your own question.
You are going over there to buy some media.


They certainly aren't staying in business on my $30 to $50 a year in purchases which are mostly clearance or sale items anyhow.

I was looking at the memory in case they had a sale that made buying it there realistic. I just didn't expect prices at fives times others.

[David G Baker]

I check most store prices on line prior to purchasing. Best Buy is at the top of my list of places to avoid with a passion. I was looking at Ritz Camera's rating online today. From what I read they are competing with BB as one of the places to avoid as well.

[Dave Lehnert]

Example- A store sells a laptop for $499, At or below cost. They make money selling you extra memory, and warranty.
I use to sell electronics. An extended warranty at the time that sold for $100 cost us at the store around $18. Most people purchased the warranty.
It all in the law of retail. Customers will shop the price of the item they want to buy but not the price of all the things that go with it. The big box stores will sell 2x4 cheap but the small hardware stores will be way cheaper on nails, bolts and screws. Stores will sell milk cheap one week but the cereal will be marked up .25 a box.
The shoppes cards some stores use, It tracks customers habits. It may track that 75% of customers who purchase pop will also buy a bag of dog food. So when the pop is on sale, dog food will be marked up the same week.

[Dewey Torres]

But just ask Matt!!!!

http://www.sawmillcreek.org/showthread.php?t=98881

[Thomas Bank]

I shop and research on the Internet (like you), and usually know more about what I go to actually look at than the Jr. Collage kid trying to show me at the store.

I think that is the answer. I know quite a few people who would say instead "I know nothing about electronics - tell me what I should buy."

Those are the people that keep BB in business...

[Dennis Peacock]

Well you know, we can't control prices at Best Buy. Many here have been bashing Best Buy and some of it's practices. Let's please move on to a different topic and vote with your money at your local retail stores. Sooner or later....someone will get the idea.

[Ben Rafael]

Who said they would stay in business through 2009?
I have read that they are running out of cash. Their stores are huge for what they sell, the rent IMO cannot be sustained. Their competitors have been slowly closing and going bankrupt. It is only a matter of time.

[Ben Davis]

BBY is no where close to running out of cash. They have close to $4.5 BILLION in equity with $20.5 BILLION in total assets.

http://finance.google.com/finance?q=NYSE%3ABBY


Doc

[Clifford Mescher]

Almost every time I visit their store they seem knowledgeable and polite. Coincidence? Maybe. Clifford.

[Burt Alcantara]

In Boise, CompUSA closed, Circuit City will close any day so the only store left for electronics is BestBuy. Anyway, they always have the cables I need.

Burt

[Jerome Hanby]

I think what you saw is a holdover on what used to be pretty standard everywhere. Extra laptop memory was a good way to recoup the money you lost reducing the laptops price to be more competitive. I'd be a little surprised if any brick and mortar store had "good" prices on laptop memory.

[Ben Rafael]

Almost every time I visit their store they seem knowledgeable and polite. Coincidence? Maybe. Clifford.

I always find them polite, not knowledgable.

[Clifford Mescher]

I always find them polite, not knowledgable.
Maybe I'm lucky. I always found that they knew about the products they sell. Clifford.

[Ben Rafael]

Maybe I'm lucky. I always found that they knew about the products they sell. Clifford.

You are lucky.
I miss Good Guys. Always had knowledgable sales people.

[Paul Ryan]

All I will say is I DISLIKE Best Buy a great deal. I have expressed my reasons in the past.

[Dan Sinnett]

I was just looking at Best Buy's laptop memory prices which are insane! Sale price on a Kingston 1GB SODIMM is $30 and Newegg sells it for $11! The regular price is listed as $100. Best Buy has a PNY 1GB SODIMM for $75 and Newegg charges $14 for the exact same thing in the same retail package.

You think that memory prices are bad....take a look at what they are charging for cables. Example...2m Monster HDMI cable sells at the Big Box stores for $99....you can get the same length and certified for higher bandwidth throughput for $9 + shipping on Amazon.

I worked at Circuit City back in the day and we got everything at cost for our employee discount.....accessories and cables have a ridiculous markup. (So does car audio)

[Matt Meiser]

Based on the reports I just read, it sounds likely that Circuit City could be out of business as of tomorrow. I think that would leave Best Buy as the only major national electronics retailer. That should be good for the local guys' business.

[Russ Filtz]

In Boise, CompUSA closed, Circuit City will close any day so the only store left for electronics is BestBuy. Anyway, they always have the cables I need.

Burt

CABLES!! at BB?!! Those are the WORST deals ever. All they seem to have are the wildly overpriced Monster Cable drivel. I get my stuff at Amazon, Newegg, Monoprice, Cablestogo, Accessories4less, etc.

[Paul Steiner]

I know how BB is staying in business, Americans are materialistic. How many people have to have a latest and greatest gadget, eventhough they already last year's model that works fine? Also how many kids do you see walking around with headphones in their ears at all times?
These two things are also my pet peeves. Thanks Best Buy.

They also do typical retail stuff, loss leaders, up selling, hard selling, bait and switch.

[Brian Elfert]

I buy new electronics and computers when the old ones either die, are no longer compatible with current formats, or my computer gets unbearably slow.

I don't understand the folks that talk about buying a new flat planel TV every year or two. Are they all rich and debt free? Same with replacing desktop or laptop PCs every year. Some of these people have three or four big flat panel TVs in their homes.

I replaced my PC in 2000 and again in 2005. No intentions to replace any time soon. I did get a new laptop last month to replace a 2000 model only because I got one for $225. I was getting by without a laptop because the old one had Win 98 and couldn't run anything.

I bought a new 27" Sony TV for the princely sum of $550 in 2001 when I moved to my new house. It is is the only TV I own. I have been considering a new flat panel TV, but my TV works and they aren't shutting off analog cable yet so I think I'll hold off until maybe next year.

[Greg Cole]

Cause Circuit City is liquidating all it's stores? :confused:

[Mark Elmer]

Hi all,

They do a lot of business with folks redeming gift cards.

I got a $25 BB gift card at Christmas. I went in an got three DVDs. I had to cough up about $3 out of my wallet to fund what the gift card didn't cover.

But overall for computers and electronics I go elsewhere.

[Dave Lehnert]

Hi all,

They do a lot of business with folks redeming gift cards.

I got a $25 BB gift card at Christmas. I went in an got three DVDs. I had to cough up about $3 out of my wallet to fund what the gift card didn't cover.

But overall for computers and electronics I go elsewhere.

I heard a story on the radio a few years ago that BB was able to put 42 million dollars back to the bottom line one year in unused gift cards. Think about that. People walked in and gave them 42mil for nothing in return but a plastic card.
I work in retail and you would be shocked at what the redemption rate is in gift cards. I know of some retailers that less than 5% of cards sold is ever used. Stores love to sell gift cards.

[Brian Elfert]

If gift cards have no expiration date and no maintenance fees how can stores ever move money from unused cards to the bottom line?

Money from the sale of gift cards generally has to be held in escrow until the card is used and the revenue cannot be recognized until the card is used. Perhaps there is an accounting standard that says revenue from unused gift cards can be recognized as revenue after a certain number of months or years of dormancy.

Now, I don't know if Best Buy gift cards have expiration dates or maintenance fees, but these days most stores have neither on gift cards due to the uproar from customers and lawmakers.

[Ben Rafael]

There must be an accounting standard to deal with unused gift cards. What the standard is? I dont know.
California(of course) is trying to implement laws that would take the unused gift cards and give the cash to the state. They were saying it is similar to a dormant bank account, which does escheat to the state after so many years.

I am against anything that takes money from it's original owner. Whether the thief is a private business or the state.

[Dewey Torres]

I just got a notification that Best Buy now owns Napster (or at least their costumers):eek:!

http://f.chtah.com/i/0/446663542/spacer.gif Dear Napster Subscriber,

On October 25, 2008, Napster became a member of the Best Buy family of companies. As part of this change, beginning on February 17th, 2009, any personal or other data that you share, or have shared, with Napster may also be shared with Best Buy and/or its affiliated companies.

Similar to Napster, Best Buy is committed to protecting the privacy of its customers. Napster will continue to safeguard your data according to our strict privacy policy, set out at http://home.napster.com/info/privacypolicy.html (http://email.napster.com/a/hBJcgHEAan4t2B7bdusAGJ2CJLq/privacy). Best Buy also employs a similar stringent privacy policy, located at www.bestbuy.com/privacy (http://email.napster.com/a/hBJcgHEAan4t2B7bdusAGJ2CJLq/bbprivacy).

Continued use of the Napster service after February 17, 2009 constitutes an acceptance of this new privacy policy. If you elect not to share your data with Best Buy, you will need to cancel your Napster membership before February 17th, 2009. In addition, if you prefer that your prior data not be shared, you will need to send a message to privacy@napster.com.

We are excited about our partnership with Best Buy and look forward to the many opportunities to provide you with an even higher quality of service that it will bring.

Your Friends at Napster.

[David G Baker]

I am safe on the Napster issue. I stopped using it after it was destroyed and have and will never purchase any music by the individuals that implemented the destruction. I had over 4000 Napster songs and over 90% of them were long past copyright dates. Sort of the way I feel about the new owners.
Now do you really Want to know how I feel? :D

[Dewey Torres]

Now do you really Want to know how I feel? :D

Probably not... sounds like you are still upset with them as are many.

I just use it because I would rather pay .99 for a song that I like than be stuck with a $15.00 CD with one song I like. Heck... now a days buck is like yesterdays quarter away and it doesn't take much enjoyment for me to justify the purchase.

I get a new one when I go for a run. The motivation helps. I do some of my best problem solving during runs.

[Dave Lehnert]

If gift cards have no expiration date and no maintenance fees how can stores ever move money from unused cards to the bottom line?

Money from the sale of gift cards generally has to be held in escrow until the card is used and the revenue cannot be recognized until the card is used. Perhaps there is an accounting standard that says revenue from unused gift cards can be recognized as revenue after a certain number of months or years of dormancy.

Now, I don't know if Best Buy gift cards have expiration dates or maintenance fees, but these days most stores have neither on gift cards due to the uproar from customers and lawmakers.

I am sure they did not move all the money just part. With such a low redemption rate you could move money and be safe. I have no idea what Best Buy redemption rate is but would have to be close to other retailers. My guess would be if a card was not used in the first year, year and half it would never be used.