2007/04/14

Failing At Business, Lesson 3 - Prove You Can't Be Trusted

Ironically, though the title of this post is 'Failing at Business', the company I'm going to discuss can't really be considered anything but an unqualified success. This retailer has grown phenomenally in the 20 years since I first encountered them in Minnesota. They've taken over other chains. They've transformed the retail electronics industry, and I guess in the end this says more about what we, the consumers, are willing to put up with...

...because for anyone who's dealt with Best Buy, a company that could easily be given the title of 'America's Sleaziest Retailer', the list of ways in which they try to rip you off is endless. Keep in mind that, long before they got caught with a parallel internal website that they used to dupe customers into paying higher prices than were featured on bestbuy.com, this company had been sued by the attorney's general of Minnesota, Wisconsin, New Jersey, and Connecticut.

Here are just some of the more nefarious ways Best Buy tries to separate you from your money:

The Parallel Website - Mentioned this one above - Basically they use it to prove that the great price you saw on bestbuy.com doesn't really exist. Maybe you imagined it?

Everyday Sale Prices - More than just a marketing slogan, Best Buy had a habit of swapping their regular price tags for so-called 'sale tags' that featured...the exact same prices! Reach behind the sale tag and guess what you'd find?

Bait & Switch - Best Buy practices this tactic as an art form. "That model? Don't believe what you read on CNET. It's junk." "That model? It's really popular. We might get some in a month, but we're got this other one that's got the exact same internal components." "Was that model in the advertisement? No, we don't really carry it."

Switch & Bait - Otherwise known as, Who's the expert here? "That model? It's discontinued, but the new one with HDMI, DVI, component video, and multi-byte, NTSC-compliant, filtered decoders is great. It's only a few dollars more, but I want you to get something you're really gonna love."

Interestingly such tactics, in addition to the non-stop scrutiny of law enforcement, don't seem to have much of an effect on Best Buy's corporate image. The retailer was named Forbes' Company of the Year in 2004--no doubt due to the piles of money Best Buy makes, and after all that's really what counts. Right?

21 Comments:

Oh, I can't walk into Best Buy. Or any other super-sized store. I go into a blind panic. Once, I went to Costco. I was new in California, and I stood in this giant store - and saw all these big items stacked up high - and thought "Shit. If there's an earthquake, we'll all be crushed." Just then, an acquaintence of mine saw me and he knew the look - he led me out of the store, into the fresh air.

These super-sized stores are designed to screw the public, AND crush you in an earthquake. I'm just saying.
kvatch, the solution to the Best Buy problem is simple: don't shop there. Go to Circuit City. We know CC needs the business. That's the beauty of competition. You can take your business elsewhere.

For whatever it's worth in 2004 Best Buy pulled in revenue of $27.4 billion. Of that top-line figure, $934 million was net profit.

In other words, the net profit margin was 3.4%. That's pretty skinny. The results may be good for a discount electronics retailer, but a profit margin of 3.4% is low. Low. Just low.

The company has about 128,000 employees.

The Cost of Goods Sold -- the amount BB spent to acquire the stuff it sold to consumers -- was $21 billion.

Salaries, General and Administrative expenses were about $5.1 billion for the year.

Companies like Best Buy and Circuit City earn small profit margins. They all sell pretty much the same lines of merchandise. Thus, there's only two reasons a shopper will pick one over the other: price and/or convenience.

Meanwhile, WalMart isn't attempting to beat BB or CC on the price of merchandise. WalMart is selling flat-screen TVs for slightly more, but it's selling the service contracts for much much less than the other two stores. Thus, the lowest TOTAL cost to buy and safeguard a flat-screen TV is obtained at WalMart.

But if you're feeling lucky, you pay less for the TV at the other two discounters and skip the service contract.
Please! They're not in the business to not make money! That's what America's all about, you hippie! I bet you hate Wal-Mart too!
...the solution to the Best Buy problem is simple: don't shop there.

Mother puss-bucket, no_slappz! What vengeful god did I piss off to deserve you? Does it even occur to you that I probably don't shop there? Or that the post has nothing to do with encouraging or discouraging people from shopping at Best Buy? No, I suppose not.

Would you care to offer an opinion on changes in American's shopping habits, perhaps their tolerance for shady business practices, that support keeping a scummy retailer like Best Buy in business?

And BTW I believe that 3.4% actually is pretty good for retail electronics...at least good enough to get them an acknowledged by Forbes. They're all about moving volume anyway. Thus the emphasis on getting you to walk out with something no matter what tactics have to be employed to get you to do it.

They're not in the business to not make money!

Carrie... No truer words. So, I gather you enjoyed being fleeced by 20 year old Best Buy salespersons.
Diva... I don't have a problem with Best Buy's stores, but Costco or Carrie's favorite Wal Mart. You can't get me out of those stores fast enough.
Arrrrrrgh. Time to rant! Sorry.

I agree in principle with most of these comments, although CostCo does give close to 100% of its political contributions to the Democratic party. That is why, when given the choice of going to our local Wal-Wart (which has put our local department stores out of business) every 5-7 days or making a list of needs and then driving to CostCo in Kennewick, WA, two hours from my house, maybe every 4-6 weeks... just so Wal-Mart won't get as much of my money... I wait and then buy what I need at CostCo.

What I tend to think about is not what type of store I buy from as much as WHO I am buying from. For example, when it comes to fast food, the stuff is deadly and I usually don't eat it, but if one must eat at restaurant chains, the only two I am aware of who give most of their political money to Democrats are Arby's and Sonic.

You can find out more about where your money is going politically at www.BuyBlue.org.

I like to keep my purchases local as much as I can, so the local merchants can stay in business and make a living, and not get drummed out of business by the sprouting up of a new Home Dupe-O, Super Mall-Wart, Sham's Club, etc. The fact that I live in a "red state" area, and knowing that most local merchants may well vote GOP anyway, doesn't bug me like it used to. It's about being part of the local community and keeping a sense of community going... that has become a stronger factor with me in the small town in which I live.

If I have a choice to have something delivered via US Mail over UPS, I choose the US Mail, warts and all... because UPS was one of the major contributors to the Bush campaign in 2004. Something like $900K? I'm not sure how much it was, but it was an astronomical amount. Same goes for FedEx. And the NRA... I own a rifle, but I would never pay dues to an outfit run (or if he doesn't still run it, influenced) by a right-wing nut like Wayne LaPierre.

I am an Oregon public employee, and I if I am ever faced with a choice between sleeping in a Shilo Inn and sleeping in my car, I will choose my car... because Mark Hemstreet, the owner of Shilo Inns, has been a heavy financial contributor in the past to causes and state ballot measures which are intended to erode unions and the rights and pensions of Oregon's public employees. Same goes for Boyd's Coffee... heavy contributors to such measures... if I can avoid drinking anything Boyd's, I do avoid it. When I ask for coffee at a restaurant, I ask what kind of coffee they use. It might embarrass my wife or friends, but fuggit. I am absolutely unforgiving when it comes to some things. For a while I even boycotted a lot of local businesses who advertised on the local radio station's Rush Limbaugh broadcast, until I realized, hey, they are just advertising where they know the most people will hear about their business. It doesn't necessarily mean they are right-wing mouth-breathers... It is quite possible they are, but not necessarily so... and the more money that stays in the local community, the stronger I believe the community is.

Nonetheless, although I don't care for the "big box stores" I will make the long drive to CostCo before making the short drive to Wal-Mart any day... because the existence of the local Wal-Mart has limited the variety and availability of shopping in my town.
I see now one of their Geek squad has his ___ in a wringer for taking pictures with his cell phone, of a female while she was in the shower!:)

Btw...Carrie Oakley is a troll that's been around since I've been here. I bit - once.;)
It is all about the bottom line indeed.

I see two separate points here though. On the one hand, the conservative motto of "if you don't like it, don't shop there" certainly does apply to places like Best Buy and Wal-mart (among others).

However, certain nefarious practices should be, and are illegal. If you take the above model to it's logical conclusion, people who fall prey to con-artists should have no legal recourse. If someone cons you out of your money, that is your problem.

If you are intelligent and cynical, you don't really have to worry about con artists. But if you are kind, trusting and of average intelligence, you might have a hard time distinguishing a con from a legitimate offer.

And THAT is what laws are for: to protect the average person and punish those who take advantage of them.

These laws should apply to large corporations as they do to the average con man.

Sorry for the long post.
I tried three times to buy a computer advertised by Best Buy, and each time they had just sold out- but they did have another, more expensive computer that they'd be happy to show me.

So I ended up getting my computer at Office Depot, and descended into Rebate Hell.

I don't know who I'll buy my next computer from- but I know who it won't be.
i have become very conscious of where i spend my money and how these days. if we have to work within the consumeristic system- i want to try and stack the deck in my favor. to that end- unless i absolutely have to- and then i hold my nose- i don't shop wal-mart and i try to buy local. we have a local family owned hardware that we frequent often and it is unbelievable what you can buy there. take some time and do some research- it pays.
Snave... Living here in Sodom by the Sea, it's much easier to "buy local". We have very few big-box stores like Wal Mart, and I to try to buy local as much as I can. Hey...and BTW, thanks for mentioning buyblue.org. It's a great resource that I use all the time.

Praguetwin... Best Buy has been sued in many states, and repeatedly by the Minnesota AG for their business practices. So someone is looking out for the little guy, but this doesn't seem to stop them. Another day...another scam.
ThomasLB... I know your pain. I tried to get a flat-screen TV for my parents, and it was a disaster. My "That TV? Don't trust what CNET says. It's junk," story came from that incident.

TFTY... You know, I've had pretty good luck with Geek Squad. Don't use 'em myself, but have recommended them to non-tech savy friends, and they had pretty good experiences.

And about Carrie, I know. She's a Rex Kramer wannabe but not nearly as funny.

Betmo... We have many excellent local hardware stores here too--use them whenever I can.
Oh, goodie. Carrie Oakey is back.
On my way to the grocery store today, I saw a big crowd picketing Best Buy with signs indicating Best Buy is unfair to workers. Lots of peops unhappy with those guys. I heard once they have more Internet "hate sites" than any other retailer. I wonder if that's true?
I bought a computer there and the sales person flat out lied to me. I know a little about computers and he tried to upsell me stuff I knew I didn't need. He would tell me I needed a faster processor for reasons that I knew were false. I literally had to tell him to leave me alone, so I could look myself. I reported him to the someone, but I don't know if anything happened.

I don't buy any major purchase there, which kind of sucks because we really don't have any other options here.
I bought my latest computer at Circuit City and I have to say...their customer service was and is fantastic and every question I had was answered with respect. Truly wonderful place in my eyes...
Best Buy got me by selling me a service plan for my iPod and then never letting me get it replaced when the battery was losing life because it was "still within specs." After my iPod completely died however, the service plan had expired and Best Buy got to laugh at me. Wankers. I got my new iPod at Target
Diva... Wish it was Rex Kramer instead.

Nvisiblewmn... Best Buy may be trying the same trick that Circuit City is trying: Firing all their sales people and hiring them back at lower salaries. Scummy.
Graeme... I've reached where I make computer purchases over the Internet, usually directly from the manufacturer, but I'm not the "typical" customer.

Kay... Welcome to Blognonymous. Glad you had a good experience with Circuit City. I find them to be only one step better than Best Buy, but region may have a lot to do with that.

Scott... Why not buy your iPod from the Apple Store? Online or down in the Twin Cities.
The solution is to simply do some research, know what you're going in there for, and stick to your guns once there. They're not pulling anything other store chains don't pull. I'd gotten into the habit of taking in "screen grabs" of their website when they were pulling that double website business, but they've stopped doing it since they got caught. I'd still advise doing it though, because they'll probably start it up again when they think everyone's forgotten about it.

No matter where I go, Best Buy or elsewhere, I simply won't put up with "Oh you don't want that, you'd want *insert name of unsold product sitting in their warehouse.*" As soon as they start that, I just put my hand up, say "Look, you gonna sell me this or do I go elsewhere???" Usually, when faced with a determined customer, the sales reps will back off. They go for the low hanging fruit, i.e. the waffler who doesn't know what they want. So even though it might take some pre-planning and effort, things the typical Americans aren't famous for, know what you want and don't take any guff.

It's too bad. I bought my first high quality stereo (Pioneer SX-838) from them back in the mid seventies when there was one store on 2nd avenue in downtown mpls and the name was "Sound Of Music." It was a good store with knowledgeable employees.

Circuit City??? Hah!! What a joke. AFAIK, all of the ones here in the Twin Cities have been closed. For good reason. I gave them several chances, and in all cases, their efforts were pathetic at best. Lazy apathetic employees who knew NOTHING about what they were selling. The last straw was when I was looking for a DVD recorder Finally, after 20 minutes someone decided that maybe my money may be green after all. But it was too late, I was pissed and walked out. Sears got my money instead.
Haris... I do think that Best Buy has come up with a few tactics in their day that are different than other stores--the parallel website for one, but I was intrigued by what you said about Sears.

That happened to me with when I bought a flat-screen TV. I knew which one I wanted, and tried to get it at a bunch of different stores. All had a similar looking unit with a different model number (a trick they use to deny your ability to price compare). I ended up, as you did buying my TV at Sears.

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