Best Buy to Match Online Prices
Retailer Will Match Online Prices, Shrugs off ‘Showrooming’ — Best Buy Co. is planning to match the prices of Internet competitors such as Amazon.com Inc. this holiday season, even as it plays down its concerns over shoppers browsing gadgets in stores only to buy them for less online.
Context & Ripple Effects
Best Buy enters the 2012 holiday season on the defensive: in March it announced plans to close 50 big-box stores under what CNET framed as the Amazon squeeze, and over the summer it began remaking its floor layout to copy Apple's retail look. The price-match pledge is the third leg of that turnaround — a direct answer to showrooming, the practice of testing gadgets in-store and buying cheaper online.
The move also reverses the company's own pricing history: back in December 2007, Gizmodo caught Best Buy running an in-store website that displayed higher prices than its public site. Committing to match Internet competitors puts the retailer's shelf prices and its online prices under the same ceiling for the first time, which is why the story drew same-day pickups from eight outlets including TechCrunch, Business Insider and GeekWire.
First-order effects
- Holiday shoppers can now buy gadgets at Best Buy without first checking Amazon, removing the discount gap that made showrooming rational; Best Buy accepts thinner margins on those matched sales to keep the transaction in-store.
- Amazon loses its structural price advantage at the point of purchase decision — the moment a shopper is holding the product in a Best Buy aisle.
Second-order effects
- Other big-box electronics and general retailers face pressure to adopt matching policies of their own or cede holiday traffic to whichever chain guarantees parity, turning price-matching from differentiator into table stakes.
- Manufacturers and distributors of consumer electronics see pricing discipline tighten: if every major retailer matches online prices, MAP-style uniform pricing hardens and promotional discounting becomes less effective as a share-driving tool.
Third-order effects
- If matching holds through the season, physical retail's role shifts toward service, immediacy and experience — the logic behind Best Buy's Apple-style remodel — while pure price competition migrates entirely online, squeezing chains whose cost structures still carry big-box overhead.
- Widespread price parity could eventually draw regulatory or antitrust attention around how much pricing information flows between dominant online sellers and brick-and-mortar competitors, though no such action exists yet.
The trend: Brick-and-mortar retail is responding to e-commerce price transparency not by fighting on price alone but by absorbing online prices into stores while repositioning physical space around service and experience.