Best Buy will match online prices this holiday season
Online retailers often offer price-matching deals; last year, Amazon.com even released a price-checking app that allowed users to scan barcodes in-store and then make purchases from the site, using the phone.
But this year it looks like the big-box stores are mixing it up: Best Buy has announced that it plans to match online prices this holiday season. What's more, the company will offer free home delivery on items that are out of stock in stores, according to The Wall Street Journal, which cites an anonymous “person familiar with the matter.”
These moves come just weeks after Best Buy’s new CEO, Hubert Joly, brushed off the idea that physical stores these days are simply “showrooms” for online retailers. In an interview with the Star Tribune in September, Joly argued that “showrooming,” or the phenomenon in which people use brick-and-mortar locations as showrooms to see and test out products before going home to purchase said products online, is not really an issue for the company.
“I believe showrooming is one of the greatest falsehoods about our company,” Joly said. “If there was a lot of showrooming, I don’t think we would have $50 billion in revenue. We must have at least a few people buying in our stores.”
Best Buy’s plan to match online prices is part of its effort to ensure that people who walk into the store don’t leave empty-handed. This makes sense, since the biggest advantage physical retailers have over online sellers is the customer service aspect—plenty of people still prefer to make informed purchases guided along by a friendly, knowledgeable salesperson.
Best Buy's president of e-commerce, Scott Durchslag, contends that the key to making physical stores work in an increasingly online world is to marry the two—brick-and-mortar and online retail—instead of tearing them apart.
“I think a lot of the discussion, debate, and analysis that I have seen is based on a false dichotomy of ‘bricks vs. clicks.’ I don’t think it’s online versus bricks-and-mortar stores because that’s not the way the consumer behaves,” Durchslag told Business Insider recently.
Speaking about customers’ behavior, Durchslag noted, “Once they’re in the store, they’re yours to lose." He calls showrooming "a symptom, not a cause," and adds that a retailer can make sales by offering expertise and personal service in ways that are unavailable online, calling the combination “the future of electronics retail.”
Is ‘showrooming’ an issue?
Last year, when Amazon.com released its price-checking app and even gave shoppers an incentive to compare prices by offering a 5 percent discount on Amazon.com merchandise, physical retailers were quick to cry foul. The Retail Industry Leaders Association claimed the incentive unfairly encouraged shoppers to use physical stores as showrooms before making purchases online. Republican Senator Olympia Snowe of Maine also said that the promo was anticompetitive and attacked “Main Street businesses that employ workers in our communities.”
Earlier this year, Target expelled Amazon.com’s Kindle e-readers and Kindle Fire tablet from its shelves with no official explanation. However, The Verge, citing an unnamed source, said the issue was a “conflict of interest”—in other words, Target views Amazon.com as a competitor who happens to have lower overhead and offer lower prices on many of the products Target sells. Walmart, another Amazon.com and Target rival, also does not sell Amazon.com’s e-readers or tablet—although Best Buy, Radio Shack, Staples, Office Max, and Office Depot do.
So does “showrooming” hurt businesses?
According to The Wall Street Journal, not really. Best Buy estimates that one in five “showrooming” shoppers ends up making a purchase from a physical store. Toys ‘R’ Us CEO Gerald Storch denies that the company has suffered much from showrooming, though the company has also increased its production of private-label products by 30 percent since 2006, in an effort to address comparison shopping. Walmart thinks that the best way to deal with showrooming is to embrace it, and “be the best showroom,” where customers “want to go and get the experience.”
Walmart is also experimenting with same-day delivery, for customers who want the convenience of online shopping coupled with the instant opportunity to purchase in a store and walk out with the goods.
I may be alone over here (with the optimistic big-box retailers), but I don’t think physical stores are obsolete just yet. After all, people still enjoy the general experience of making a purchase—you don’t get quite as much of a shopping high from clicking through a one-step checkout process. Though I spend a good 12 hours of my day on the Internet, I still find myself wandering into my local Best Buy every now and then. Plus, I don’t necessarily feel like a couple of dollars is worth saving if it means giving up instant gratification.
The online savings may be even less this holiday season, as online retailers will be required to charge sales tax in some states. Amazon.com and other online stores already collect sales tax in New York, Pennsylvania, Texas, and, just recently, California. In the next couple of years New Jersey, Virginia, Indiana, and Nevada will also impose online sales tax.
Best Buy, which closed 50 stores earlier this year in an attempt to “think small,” is still working out the kinks in its plan to match online prices. Some exceptions may apply, the company says.