Now for a little thinking outside of the box: Amazonshould buy Best Buy.
David Paul Morris | Bloomberg | Getty Images
A customer looks at smartphones at a Best Buy store.
And no, I’m not totally nuts.
Here’s the way I’m thinking about it: No matter what anybody will tell you, when it comes to new electronics and other products, such as appliances, most people still want to feel, touch, and hold them — and maybe even actively be sold by somebody who can explain how they work. (Been in an Apple store lately?)
And unless they absolutely and impulsively must have whatever it might be this very minute, most people also want the lowest price.
But face it: We’re all guilty of using Best Buy as a showroom for Amazon or other online stores.
The solution: Buy the showrooms.
Best Buy clearly is on borrowed time in its current format — even if it winds up being bought by founder Richard Schulze, as has been speculated. No matter who owns it, Best Buy will need to be pared down and radically restructured.
Also, Amazon’s key advantage— no state sales taxes — is less of an edge as more states impose taxes on online sales.
What’s more, Amazon’ sales growth and operating margins are decelerating.
Enter Best Buy. Overnight Amazon would have 1,000 well-located Internet showrooms with little in the way of inventory (or maybe a lot of inventory — still to be hashed out in my head) but a way to accelerate sales.
As one top executive of a larger retailer (whose idea this was) tells me: “The ‘bricks and mortar’ guys now understand the potential of the Internet and everybody is trying to grow that business. Jeff’s smart enough and bold enough to attack these ‘B & M’ guys where they live.”
As an added bonus: Best Buy (annual revenues of $50.7 billion) would help Amazon ($48 billion) get to its goal of $100 billion a lot faster.
And with its stock trading at 95-times forward earnings, what a better time to use its stock as currency?
Of course, Amazon’s stock would probably get hammered on the news, but then again, given these markets, maybe not!
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