It’s not just the specialists hurting from Internet sales. Best Buy’s recent Q3 sales were slammed by consumers shopping online.
“The challenges faced by electronics stores were highlighted this week when Best Buy…reported that third-quarter net income fell 4.4 percent…and sales fell 1.1 percent,” said a New York Times article Saturday, which declared that the consumer electronics market is ”dramatically shifting away from stores and toward online,” according to a C. Bernstein & Co. analyst.
Consumers are going to Best Buy to get advice on products and then using their smartphone to find a better price for the product, said the analyst Colin McGranahan.
“Online has now gotten big enough to encroach on Best Buy,” he said.
Some analysts wonder how Best Buy will counter the trend and McGranahan lopped $1 billion off his forecast for Best Buy’s global sales, reducing it to $50.2 billion.
Another analyst said Best Buy may need to change its business model and shift to smaller stores.
Specialists have already suffered this trend over the past 10 years.
Rob Elliott, executive director of the In Car Experts buying group says, “Best Buy is experiencing what the specialist has experienced for years, even before the web existed. Big box stores like Best Buy were the specialists’ web. The consumer would go to the specialist to get a thorough demonstration and gain as much knowledge as possible. The consumer would then make the purchase at the big box store where better buying power and less concern for knowledge gave the big box the price advantage. This is exactly what is happening to Best Buy.
He adds, “In order for Best Buy to stay competitive they will have to do what the specialist does. They will need to perform a service that cannot be gotten online just as our members perform installation services. Additionally, they will have to look to vendors for brands and models that are not available on the web. In Best Buy’s case they have already started doing this with their exclusive house brands. I think we may even see Best Buy purchase some brands in order to keep them exclusive to Best Buy just as Target did when they purchased the Mossimo brand.
Source: The New York Times
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Have been in business for over 38 years selling and installing car audio and video, security, and accessories. If you have visited Best Buy lately you might notice that they have shot their self in their own foot when it comes to car audio. Limited lines of equipment and little accessories to support the line. They have looked at the car audio section at all the stores and have considered doing away with installion and do music instruments instead. They follow the money trail for profit. Just like circuit city best buy will soon be a thing of the past. To many stores and to under qualitfied installers and employees. They need to learn to adjust on the fly and sell online like the rest of us have. For 35 years I hvae maintained a retail store presence, employed personal. Over the last few years I have closed the big retail store and now have only a web presence. Make more money now that ever, even in the recession. Remember this “Its not what you make but what you own. Best buy owes everybody and will fail if they don’t adjust to the new consumer. He wants to buy it cheap and install it with the help of kits and harnesses. No longer do they need ther average installer to do the job. With the industry introducing DIY products in the last several years, most of the consumers do it without a installer. Best buy cannot sell online with as deep a discount as smaller sites do because of what they own. To much overhead will kill even the biggest. Get with the changing times. Sell online buy selling to other web site that can sell it cheaper. Use your buying power to buy it cheap enough to sell large numbers to these a web site and do away with the store display that seems to be shrinking.
Could the economic challenges of this country be dramatically improved if the average consumer were intelligent enough to realize that buying products at cost puts no money back into our economy? Sure, the rep gets his commission and the manufacturer gets his cut, but the real profit dollars, those which create jobs/pay, and pay local and state taxes are absent. There simply aren’t any when someone makes a purchase on line at cost. Taxation alone on internet purchases would help our national economy, yet politics must be standing in the way of that too. Surely the politicians aren’t so stupid to not realize that taxation on the volume of online retail done, could be a huge revenue stream that would aid in balancing the budget. The jobs that need to be created in this country aren’t going to come from online e-tailers. If the business done on line were being done in brick and mortar establishments across this country there would be a huge decrease in unemployment. Those brick and mortar locations generate revenue not only for themselves but revenue that stays local, taxes that get paid localy and within their state, and most importantly it creates jobs. If someone like Best Buy has to cut jobs due to the impact the internet has on their business/our industry will the greater population realize what is happening?
I agree with J.R. about the lack of enforcement of taxes on internet sales. This alone could change our local and state revenue problems and would help curb ever increasing taxes and fees that we as “legitimate businesses” have to pay. Already in every town in the USA empty commercial building are abundant and the storefronts are becoming a thing of the past, thanks to internet sales and Walmart. There are going to have to be some regulations and changes in our structure or regulation and taxing, or we are all out of business and out of jobs. We were told by government a few years ago that losing industry and industrial jobs was only a change to our new marketing society. We need those industries back and we need to keep the small business storefronts to survive.
They won\’t waste their time on car audio. Take a look at the percentage of people that walk into a Best Buy that actually give a second glance at the car audio section. That\’s not to mention that ALL of the ones I go to seem to have vacant spots in their display areas. You can bet their money is being spent right now considering what else will take up 75% of the car audio department space and they will relegate car audio to a single wall, which matches that of Rock Band drum stick selections and extra symbol attachments.
The specialist can sell his brains out and might get a high sale:visit ratio, will that happen for a majority of them. of course not. Should they perish because of this deficiency in selling skills? Global economy says yes, local small business owners scream \"no, down with the internet\". As stated above by Audio Express, it\’s up to the manufacturer to put a limit on how, to whom and where things are sold, but with a global economy (which is what we are and what we face), countries with a devalued currency will ALWAYS be able to step in and flood the market. The market that means the most at this point is the internet market. For years this thing has crept up on our industry and all the manufacturers HAD to go to Asian countries to limit costs so they could compete. Now you have the OEM Asian manufacturers actually setting up their own distribution chains of their own direct product right here. Tell me how ANYTHING a bunch of \"brand name\" manufacturers huddled around a table can be done about that. They could limit their sales to only the best of specialists and still the other products will sell…..in higher quantities…..thru the internet. NONE of the manufacturers have enough marketing power to enact a global marketing campaign that will pass the rigors of even YouTube\’s metatagging system. People have to be looking for it. SMD is the biggest car audio related anything on YouTube. If the individual dealers do not start majorly diversifying what they sell and sell it online, finding creative ways to market themselves along WITH the product to create a subconscious link, they are going to have a short life. A local market can only take you so far when the entire world is marketing to your local customers thru their computers and phones. Put ads on Bit Torrent sites, where the growing, connected ENTIRE WORLD pirates their music, videos and Audio Books. Note: as soon as you do this, the Asian manufacturers will catch on and flood that too. The biggest problem I really see is that car audio retail specialists (majority) just have no clue what is going on around them and don\’t give a damn. Come 6pm, hell or high water they are turning out the lights, closing and locking the door and going home. Be a fly on their shoulders and see just how few of them research trends when they get home.
so now the manufacturers have to choose between best buy, hh gregg, crutchfield, and amazon, ebay. in car audio it may be cheaper to drop out than make the investment
necessary to differentiate your offer in the market place.
i, for one, am looking forward to the outcome.
This comment is on behalf of Eddie Aguilar of Audio Express, San Antonio, TX:
OK FAMOUS NAME BRANDS, BE CAREFUL FOR WHAT YOU ASK FOR BECOUSE YOU JUST MIGHT GET IT!!!
For years I have refused to carry the FAMOUS NAME BRANDS which many are now found at flea markets. I remember about ten years ago bringing in a line called MA Audio. No other stores in San Antonio had it so I decided to capitalize on the cool uniqueness of the product. We did amazingly well with the line for a few years untill a local store decided to give the product away. I went to speak with the owner in order to discuss his profit potential with the line, he listened but did nothing about his pricing. I decided to speak to my distributor as well as the manufacturer about the dealer which also sold hand bags and apparell. The distributors hand were tied since the dealer was buying direct. I made many attempts to remedy the problem directly with the manufacturer to no avail. I then made the descision to drop the line after spending thousands each month with the line.
Today I sell brands that I have not yet seen at flea markets and I will continue to stay away from the NAME BRANDS that are not able or refuse to control the reputation and integrity of their lines. The internet is a great thing, I think however that all major manufacturers need to get together and figure out a plan to maintain some sort of control of their products in order to ensure their own longterm survival in this industry. We have already seen some companies move away from car audio.
REMEMBER ON THING, IF WE DO NOT LEARN FROM HISTORY WE ARE BOUND TO REPEAT IT!!!
AUDIO EXPRESS
Could the economic challenges of this country be dramatically improved if the average consumer were intelligent enough to realize that buying products at cost puts no money back into our economy? Sure, the rep gets his commission and the manufacturer gets his cut, but the real profit dollars, those which create jobs/pay, and pay local and state taxes are absent. There simply aren’t any when someone makes a purchase on line at cost. Taxation alone on internet purchases would help our national economy, yet politics must be standing in the way of that too. Surely the politicians aren’t so stupid to not realize that taxation on the volume of online retail done, could be a huge revenue stream that would aid in balancing the budget.
The jobs that need to be created in this country aren’t going to come from online e-tailers. If the business done on line were being done in brick and mortar establishments across this country there would be a huge decrease in unemployment. Those brick and mortar locations generate revenue not only for themselves but revenue that stays local, taxes that get paid localy and within their state, and most importantly it creates jobs.
If someone like Best Buy has to cut jobs due to the impact the internet has on their business/our industry will the greater population realize what is happening?
Rob is 100% correct in his analysis especially in how it relates to the specialist. The real issue in the continued survival of the specialist is in trying to relate the value proposition to the consumer. We have failed miserably to do that. As a result, our customer thinks nothing of pumping us for information and then buying from the cheapest place. THEY CAME TO US FIRST, AND WE STILL COULD NOT CLOSE THE SALE! Value has become a lost issue. We must find it to survive.