Best Buy can beat Amazon.com with Low Service Model

Published by clickbroker.blogspot.com.

Best Buy (BBY) has been talking up its ability to compete against Amazon.com (AMZN) with knowledgeable salespeople and limited price matching.  They are down talking show rooming for Amazon and up talking their equivalent of Apple’s (AAPL) genius bar (the in house Geek Squad).  Copying other companies formulas never works - just ask Microsoft (MSFT).

Apple salespeople are experts on one brand (their own) with a limited number of products.  Furthermore most of the Apple products are interrelated; the iPhone, iPads, iPods and Macs share many features such as AppleTalk.  Best Buy sells thousands of unrelated products making it impossible to provide the same level of knowledgeable salespeople.  Even in specific departments such as mobile phones my experience has been that the salespeople do not know their products.

Best Buy cannot separate the sales experience from the Geek experience.  Customers will never venture to the Geeks if they encounter an uninspiring sales experience.

Best Buy does have the opportunity to be the first to create the virtual (online) experience in the brick and mortar world.  Amazon captures the electronics customers that do their own research and do not need hand holding.  These are high margin low service customers.  These customers are coming to Best Buy anyway for show rooming, so converting them does not require an expensive sales force.

Best Buy should simply allow customers to scan each item in the show room, enter their credit card and select back of the store pickup or home delivery.  All accomplished without waiting for a salesperson to retrieve the item and waiting again in line for a cashier; plus instant gratification.  Best Buy can afford to lose people that need more hand holding.  The airlines learned years ago that only profitable customers are worth betting their survival on.

Best Buy needs to combine its greatest asset (the show room) with Amazon’s greatest asset (a friction free purchase experience) to succeed.  An efficient low cost, high tech buying experience will bring the ecommerce virtual world to the doorstep of the big box retailer.

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