Squeezed Between Apple And Amazon, Best Buy Posts $1.7 Billion Loss


Perhaps the only profitable section of your local Best Buy.
Perhaps the only profitable section of your local Best Buy.

The era of the big box retailer is kaput. One the one hand, you’ve got online colossi like Amazon crushing brick-and-mortar retailers; on the other, you’ve got the juggernaut of Apple’s Retail Stores, showing everyone else how selling things in meatspace is done.

A couple years ago, the writing was on the wall when Circuit City went out of business. Now, it looks like it’s Best Buy’s turn. After posting a $1.7 billion quarterly loss last quarter, Best Buy is closing 50 stores and $800 million in costs.

Why couldn’t Best Buy keep up? Well, most of it has to do with the fact that people don’t want to buy from a middle-man anymore. Apple Insider also claims that lower margin devices like the iPad are squeezing Best Buy’s business model, which may be true, but it’s really Apple.com and Amazon.com that are killing Best Buy: if you’re going to be a retailer, you either need to do it online or sell your own products directly to the public. As Steve Jobs loved to point out, no one likes a middle man.

  • Timothy Williamson

    I think this signals the return of the door-to-door salesman.

  • nolutheon

    I’d argue that consumers don’t hate middle-men if they don’t get in the way and/or add something helpful. Case in point is that Apple and Amazon ARE middle-men: neither owns the content they provide. The difference is that they provide a convenient purchasing experience and are price competitive. Consumers like convenience and price and Amazon.com and the iTunes stores provide both. But make no mistake, they are middle-men too. You just don’t have to drive somewhere to shop at their stores; instead, their stores are always with you on your mobile devices and they curate a stunningly large content library.

  • marco7

    The article misses the point: there is still a place for brick-and-mortar stores that add value. The shopping/buying experience at BB is so aversive that one shudders at the thought of walking through the door. E.g., the online inventory says they have 12, but you get “sorry, none in stock” when you arrive; you know more about the product than the salesperson who then argues with you; the salesperson puts on the hard sell to buy some Android POS instead of the iPad you want, because he gets a bonus for selling the POS. I could go on and on, but anyone who has darkened the doors of a BB in the last two years knows exactly what I’m talking about.

  • aardman

    I wonder what Amazon would do if their Best Buy showrooms shut down.

    Am I going to buy a $1500 DSLR from them if I don’t get to try it out first at the local Best Buy? Hell, no!