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December 19, 2012

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I went to Costco to upgrade my verizon phones. I got the exact same model that I would have paid $20 per phone at the verizon store at costco for FREE and instead of manufacuters 1 year warranty Costco extended it to two years.

It pays to shop around within reason.

I wish Best Buy would have done this in January when we were looking at a new TV. Amazon had it on sale for $1299 with free shipping and no tax. Went to Best Buy and they had one in stock for $1599 + 8.25% sales tax. I mentioned to the associate that Amazon had it cheaper and they would not price match online vendors. They wouldn't even consider lowering the price when I showed them an online ad for a local store since it wasn't a print ad. We tried to get them to lower the cost since we really wanted to buy it there but they wouldn't budge even after talking to a manager. Their loss....

We ended up ordering the TV from Amazon and waiting for almost a month to get it delivered. Spent $1299 with no tax or shipping and since we used our Chase Freedom card we got another 5% taken off since Amazon was one of their special categories at the time..

I think it's rare that you'll ever get a TV or high end electronics price matched. It's a gimmick that looks good in the media, but in practice, doesn't really work for the consumer. The biggest reason is that they often have unique UPC codes and/or model numbers for a store even though it's the same item. So there could be a Samsung TV 42CPLA108 available at Amazon for $100 cheaper than the 42CPLB108 which is the same exact TV in every sense only with a slightly different model number that gets them off the hook for a match. Usually the model numbers are a bit more different than that (so it's not as obvious) but it's a pretty common tactic for more expensive items.

From Best Buy's website: [The Best Buy Price Match Guarantee is] Valid for purchases made between October 7, 2012 - November 17, 2012 and November 27, 2012 - December 24, 2012.

The Gallaxy III was on promo at Best Buy this past Sunday for $50. The phone itself is fragile as a coworker dropped it and shattered the glass.

If you have a smart phone, Amazon has made this easy for consumers by creating an app called Price Check. By either scanning a bar code or taking a picture of a product, you can compare prices, knowing instantly if you really are getting a deal or using it to get a price match.

Price matching cannot save BestBuy. It will only speed their demise as they sell at a loss. They will have to determine a way to drastically change their business model or they will go the way of the saber tooth tiger.

One of the first rules of business is you cannot compete on price. You have to have a competitive advantage that is not based on price. It has to be based on lower costs, or a better product, or better service, or economies of scale, or something. Price alone cannot be your competitive advantage because if it is your competitors with a real competitive advantage will always be able to undercut you until you go out of business. That is where BestBuy is right now. The online retailers have a competitive advantage over them. Their costs are lower. BestBuy cannot compete with this by simply price matching.

As consumers we often care only about price for two equal products but it cannot be that way for the seller. If BestBuy is valuable to you, but you expect it to price match places that have lower costs then you will drive it out of business. Either what BestBuy provides has value that people will pay for or it will cease to exist at least in its current form. It cannot be any other way.

That is exactly what happened to all the mom and pop stores from decades long past. And clearly it is what consumers wanted because they shopped at the big box stores and the little stores went out of business. The little stores could not compete with the volume discounts and the economies of scale of the big stores. Their size was their competitive advantage and the little stores could not simply match their price. If the little stores price matched they would go broke, so they had to close. Amazon is like the big box retailers and BestBuy is like the corner Ben Franklin store. This story has already been written before and it always ends the same way.

You cannot compete on price alone. BestBuy has a competitive disadvantage the same way the mom and pop stores did. If they are not able to devise a way to change their model in ways that remove that disadvantage they will face the exact same fate as the mom and pop stores. They can no more fix their problems by price matching than the mom and pop stores could stay in business by price matching the big box retailers.


I am surprised that they would agree to doing that, though I think they're going to need too if they have any hope of keeping business.

Is Amazon on a monopoly path? Right now its like they own all the railroads, Park Ave, and Broadway. They even have immunity to sales tax.

@Luis,

The internet does seem to tend towards winner take all markets (A-mazon, F-acebook, E-bay, G-oogle - sorry M-icrosoft, no one really "Bings"). I think this is mostly due to network effects. It is unclear how this will play out long term but it tends to create unhealthy markets because there is no real competition.

But this creates economies of scale, volume discounts, and lower costs due to less physical presence. This creates huge competitive advantages and it is why retailers with physical presence who compete with an online retailer cannot compete on price.

It's worth noting that I am not saying they cannot compete, it just can't be on price alone. Anyone who wants to go into BestBuy with their current model which has much higher costs than an online retailer and expect to get the same price is simply asking them to defy the mathematical realities of the situation. If BestBuy is to get to a similar price as online retailers they have to drastically cut costs. I am not sure what that would look like but it would not look like the BestBuy of today.

Sorry for the funny spellings of all the internet sites. It seems that including too many of those in a post gets you in the spam filter or something because it won't post with those words in the comment.

A month ago I needed a wireless router to replace one at my home that died. Amazon had it for $28 something, BB had it for $29.99.

At checkout I told the clerk Amazon had it a buck cheaper. Right there at the register she knocked a $1.00 off the price, no "show me the price", no manager, no nothing, just POW! a $1.00 off because I said so. I was impressed!

I will never buy anything from Best Buy again because of this and many other things. I brought a lower price advertisement to them a few years back, and they wouldn't match it because it was a "special promotion".

I just bought a Samsung Note II at Best Buy and had them price match Amazon -- TWICE -- for a total savings of $100! The first time it was $50 cheaper on Amazon, but I had just had a horrible experience buying a broken phone direct from Google, so I wanted to buy somewhere that I could physically return it if it's broken. Best Buy said they'd match the price, and the sales person even helped me look up the Amazon price! A week later Amazon dropped their price another $50 during "Cyber Monday Week" and to my surprise, Best Buy matched it again, giving me another $50 back! I didn't think they were supposed to do that since it was a special promotion and they also say that they don't match online prices, but they didn't hesitate either time. I'm not a fan of shopping, so this was a surprisingly good customer experience.

Oh, and my phone wasn't "in stock" at Amazon... it would have been a 3 week wait.

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