Best Buy (NYSE:
) has announced that it will match the prices of its chief online
competitor, Amazon.com (NASDAQ:
) this holiday season. The strategy sounds like it could be
effective, but Best Buy has yet to work out all of the details.
The Wall Street Journal
, the price-matching program might exclude some products.
Depending on what those products are, that decision could hinder
the company's efforts.
For big ticket items, such as Apple (NASDAQ:
) notebooks and 60-inch Sony (NYSE:
) televisions, Best Buy may not care if consumers go elsewhere to
save a couple bucks. For smaller items, however, this might help
Best Buy maintain sales it would have lost to its dot-com
In perusing Best Buy's DVD selection, shoppers will usually
find that the first-week sales (which are applied when a film or
TV series is first released) are on par with or better than
Amazon. Once the initial sales are over, however, Amazon's prices
are typically lower than Best Buy.
While Amazon shoppers can buy the first season of Happy
, Best Buy
sells it for $16.99
. Glee: The Complete Third Season goes for
on Amazon; Best Buy charges
Older items are even more expensive at Best Buy. The retailer
for Rizzoli & Isles: The Complete First Season. On Amazon, it
is sells for
Some of these discounts are due to the wide network of
retailers that sell their products through Amazon. Nonetheless,
Best Buy must still compete. The program will be less likely to
succeed if Best Buy chooses to only match ads for products that
are actually shipped and sold by Amazon. It should not matter if
consumers choose Amazon or an Amazon merchant. In either case,
Best Buy has lost a potential sale.
If the program is fast (consumers should not have to wait long
for a Best Buy employee to verify the validity of an Amazon
price) and effective (most products on Amazon should apply,
regardless of the seller), Best Buy might be able to stop
scaring off customers
This program could go even further and induce
showrooming behavior by encouraging consumers to compare prices
and buy items on the spot. The goal here is to stop shoppers from
leaving the store and buying elsewhere. But it could also
encourage people to visit Best Buy more often because they know
that they can always get the best price available.
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