The "Best Buy" is somewhere else

Have you ever bought an iPod? How about a GPS for your car? Maybe you want a new digital camera, or a better lap top for school? If you have ever purchased one of these high priced items, and done your homework before hand, you’ve probably found that the cheapest way to go about getting what you want is by ordering online. This, along with a few other reasons, is why the electronic retail giant Best Buy may be loosing its hold on the American gadget market. The demand for the products that Best Buy carries is always high. Americans seem to have an unyielding thirst for the new, the up-to-date, and the super advanced. Best Buy has always been there as store that offers us a chance to test and play with whatever new electronic device we are interested in. But some experts say that’s all the store has become. It is much cheaper for the consumer to go to Bust Buy where all the products are on display, test the good they wish to purchase, and then return home where they can order it for half the price Best Buy was selling it for. If we were to look at this on a simple supply and demand graph, we could see that the equilibrium price for these high end electronics has been found, but the price that Best Buy is selling them for is much higher than equilibrium. These kinds of goods are extremely price elastic. If Best Buy decides to charge just a small amount more for a lap top than a discount website distributor, then almost all consumers will order the computer online to save a lot of money. Not only are there countless websites which offer these high end electronics at extremely low prices, but there are also mass merchandise retailers who can offer these products at even more competitive prices than Best Buy. Best Buy has not yet reached the point of no return. Their stocks may be down, and it may look even worse down the road, but they are still turning a profit. Their firm may be on a downward slope but there is no reason for them to exit the market. There may be a time in the near future when Best Buy will go private and sell all their stock, but for now their average costs are still below their prices set.

http://money.cnn.com/2011/03/28/technology/thebuzz/index.htm