Best Buy Competitive Advantage (9 Distinct Factors)
For a long time, Best Buy’s position in the US consumer electronics industry has been higher than that of Wal-Mart, TigerDirect, Target and other well-known retailers.
How does Best Buy maintain a strong brand image in the electronics industry despite such fierce competition? Read on to learn about Best Buy’s top 9 competitive advantages!
Best Buy Competitive Advantage (9 Factors)
1. Market dominance
Best Buy was founded in 1966 by Richard Michael Schulze and James Wheel as a store specializing in audio products before evolving into a home electronics store in 1983.
Since Best Buy was founded, the company specializes in home electronics business operations and has become one of the largest electronics stores in the United States.
Thanks to its expertise in electronics retailing, Best Buy gained significant market share in the electronics industry, eventually dominating the U.S., Canada, and Mexico markets.
2. Innovative sales service strategy
Apart from selling home electronics, Best Buy also bridges the gap of lack of information and knowledge by providing a reliable support team along with detailed information on different electronics brands.
Consumers can seek expert advice from Best Buy’s support team to learn more about the electronics brand’s details before deciding what to buy.
Information obtained from electronics experts goes a long way in providing a comparison tool that will keep customers happy.
As a result, Best Buy attracts more customers who want to know product information before buying a particular electronic product.
3. Technical Support Subscription Service
Best Buy offers customers the reliable Total Tech Subscription Service, which offers unlimited support and service for a $199.9 per year subscription fee.
Through this subscription service, Best Buy’s Geek Squad has become popular across the United States for providing quality installation and repair services on all things electronics.
Additionally, the service is available to all consumers who shop for electronics at Best Buy, as well as anyone in need of technical assistance.
This enabled Best Buy to build long-term customer relationships and create a unique selling proposition for the electronics retailer.
4. Development of strategic acquisitions
In recent years, Best Buy has capitalized on lucrative market opportunities by making several strategic acquisitions.
For example, in 2018, Best Buy acquired Great Call, and in 2019, it further successfully acquired its toolkit, Critical Signal Technologies.
These strategic acquisitions give retail giant Best Buy a quicker entry into the aging wealth space than its retail industry rivals.
As a result, Best Buy has successfully attracted more consumers, enhancing the company’s competitive advantage in the electronic retail industry.
5. Combination of online and brick-and-mortar business
Unlike some giant rivals such as Amazon.com Inc., Best Buy has invested heavily in its online and brick-and-mortar operations.
In addition to this, it has extended its services to internal calls for customers requiring a wide range of services such as installation and repair.
To further strengthen its brick-and-mortar and online presence, Best Buy has developed strategies to drive sales, such as investing in an extensive network of fulfillment centers.
The network quickly replenishes products in Best Buy stores and provides online shoppers with easier, faster delivery.
Also, the efficiency of service on Best Buy’s online platform has attracted the store’s preference over other competitors in the industry.
For example, Best Buy helps customers save time by providing customers with a mobile feature that alerts the store when they go to pick up a large item.
As a result, Best Buy continues to gain authority in the online and brick-and-mortar electronic retail market.
6. Reliable and efficient customer service
Best Buy’s reliable customer service team enables customers to obtain products and services through Best Buy employees or Geek Squad members.
Consumers can submit inquiries for different electronic products and subsequently expect quick and reliable solutions.
That way, customers who receive trusted solutions from the customer service team are more likely to return multiple times at the same store and refer other consumers to the store.
7. Reliable BOPIS (Buy Online – Pick Up In Store) combo
The unique and reliable BOPIS (Buy Online Pick Up In Store) combination gives Best Buy an advantage over other retailers.
All of Best Buy’s stores are starting to ship products to customers across the United States amid a growing preference for online shopping.
On top of that, the majority of Best Buy’s online returns are done in-store, with 93% of return requests handled by its extensive store network.
The retailer has also rolled out multiple CVS (Consumer Value Stores) and UPS (United Parcel Service) outlets for online orders to make online shopping more efficient.
This combination of online and offline shopping created a compelling and unique combination that resulted in a 40% increase in Best Buy’s BOPIS (Buy-Online-Pickup-In-store).
8. Strengthen cost management
Since 2017, Best Buy’s effective and efficient cost management has resulted in a substantial increase in the electronics retailer’s overall earnings.
Meanwhile, Best Buy’s interest expense fell from $72 million in 2017 to $64 million in 2020.
Other retailers have struggled with rising costs in the meantime.
The three-year reduction in interest expense proves that Best Buy has developed an effective cost management strategy.
9. Strong market share
Best Buy has a strong market share with 1,159 stores worldwide, including 1,036 in the United States.
Strong market presence helped Best Buy generate more profits and boost sales by 37.2% through the first quarter of 2021.
Due to the large number of U.S. stores, the domestic market has become the most important contributor to Best Buy’s total revenue.
If you’re interested in learning about Best Buy, you might also be interested in reading about Best Buy’s target market, some interesting Best Buy statistics, and whether Best Buy is a franchise.
in conclusion
For decades, Best Buy has enjoyed a monopoly as an electronics retailer.
The unique operating model brought about by Best Buy’s innovative sales strategy and effective cost management has become one of Best Buy’s most common competitive advantages.
As a result, most consumers have embraced the idea of getting all their electronics needs from a one-stop shop, i.e. Best Buy.
