First a little disclosure… I previously worked for Best Buy for 8 years and in early 2011 sold the small amount of stock I had in BBY.
When I started working at Best Buy in 2003 it seemed like people couldn’t buy stuff there fast enough. The main competition at the time was Circuit City and they had pretty bad service by comparison. I remember people coming in and literally buying everything the sales force recommended. Credit was easy and so was taking equity out of your house. Just when you thought they couldn’t find more ways to make money they started pushing the sales force to sell “D-Sub” or digital subscriptions to customers. These were subscriptions to things like magazines, a new service called “Netflix“, and other subscriptions which were close to 100% profit. Sure, it pissed some people off being solicited in a retail store… but it makes a ton of cash with virtually no COGS.
And then there was the “Internet”.
Over the last five years Best Buy’s stock has slipped from over $57 a share (Oct. 2006) to under $25 (Sept. 2011). If you lined that decrease up on a timeline over the rate of adoption of high speed Internet you’ll see a correlation. Internet retailers like Amazon, Overstock and literally thousands of micro-retailers focus on drop shipping rather than profit margin. Even more detrimental to Best Buy is that today’s consumers are shopshifting more everyday. Oh yeah… and then there’s the recession. Word on the inside is that they also recently changed their employee purchase policy. They used to allow employee purchases at 5% above cost, in mid 2011 they no longer offer anything close. I have heard that they now cap the employee discount to 50%. That sounds like a lot but some products, like accessories, have over 500% profit margin.
I’m not a Best Buy hater… I actually like going to Best Buy. I’ve found that if I talk to the right sales person I have a great experience. Over the last 5 years they have expanded their installation services as the complexity of consumer technology has grown exponentially. They also needed to do something to offset the decreasing profit margins on the actual products that they sell. I’ve also found that their “Product Service Plans” have worked out well for me and had several items replaced within 2 years due to malfunction. However, even that profit generator is being eroded by online solutions like SquareTrade.
In my opinion there is no replacement for actually shopping in a store. There’s a feeling I get when looking at, seeing and touching products in a retail environment that I just don’t get online… yet. However, the need and want to save money often trumps any “warm and fuzzy” I get when holding the latest gadget.
Jan 2012 Update: Larry Downes at Forbes really lays out a great article about this situation and how it is progressive… they are at the beginning of the “Out of Business” process if they don’t change immediately.
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As a traveling salesperson I use my GPS daily and often. I’ve owned a Harmon Kardon, Navigon, Garmin and this is my second Magellan. I bought this Magellan 3045-LM for about $130 at a local Best Buy and my initial impression after 1 month of use is that I’m not that impressed.
First off the box contains everything you’d expect for using a GPS: USB cable to car charger, window suction cup, instruction manual… the one thing I see missing is the self-adhesive “hockey puck” that many manufacturers include so you can suction it anywhere in you car. This unit also has “Lifetime Map Updates” which is the only reason I bought this one over the model that was $20 cheaper.
Here are a few of my gripes on the Roadmate 3045-LM. First: No manual volume control. This sounds petty, but when an important call comes through and I have speaker phone on the last thing I want to do is fumble through the menu on the LCD screen to quickly turn it down or up. This is also irritating while driving if I’ve turned the GPS down and I need to quickly turn it back up to hear directions. I’m guessing it costs about $0.20 more per unit to build in an actual tactile volume up and down toggle switch, I’d be willing to pay $10.00 more for a GPS with this feature. Second: You have to know the North, East, South and West designation for your destination. While entering your destination address the Roadmate 3045-LM forces you to choose the directional designation while models like the Garmin do not. If you are not sure, unfortunatley you’ll have to guess. Third: The window GPS holder is a hot mess. You actually have to slide the GPS unit down from the top. Since your windshield is slanted at a 45 degree angle towards you this can become somewhat of a problem… however, this is only where your issue begins. Magellan designed an awkward USB slot so that you can pop the USB charger cord directly into the windshield holder. I’m guessing they did this as a cost saving feature of some sort. This means that as you’re sliding the GPS unit down, you have to align the unit with both hands to fit & connect with the USB charger at the bottom of the holder. You’ll also have to wiggle it free when removing. This is completely unnecesary when you compare it to most of the “pop-in” styles of cradels on the market.
Here are some of the things I like about the RoadMate 3045-LM: Large 4.7″ LCD screen, free lifetime map updates, and multi-destination routing. Multi-destination routing is important when your in sales because you can pop in 6 addresses and hit go and the GPS will give the most optimal route… this feature is a deal breaker for me. I’ve also noticed that the RoadMate 3045-LM can acquire satellites much faster than any other GPS I’ve owned.. it is always connected by the time I’ve finished entering my destination address.
Although the RoadMate 3045-LM has many more features I haven’t covered I thought it best to focus on the most important. Manufacturers seem to building a lot of bells & whistles into their devices without trying to perfect the most basics of functionality. Unfortunately, the “basics” are the reason I buy something, the rest is supposed to be the icing.
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