[fruchtose]

The bottom end is Best Buy's biggest problem--mainly that this is how Best Buy makes money. Much of what Best Buy sells requires no physical interaction with consumers. This is as much about experience goods as it is about Best Buy's market. There are a variety of experience goods sold online--headphones, iPods, laptops, TVs, musical equipment--and its probable that a large number of these sales are not decided because a consumer walked into a physical store and experienced the product beforehand.

For instance, the first headphones I spent more than $30 on where a pair of Audio-Technica M-30s. I could not find these headphones in a physical retailer. I found them online, and I bought them purely based on the recommendations of others. I now own a pair of Audio Technica M-50s, which I bought based on the experience of the first pair of Audio-Technicas and the recommendations of others.

The element not explored in the article is authority. Authority plays a big role in how we buy things. Best Buy is perceived to have little authority; they hold little regard for consumers and have questionable customer service. Newegg, on the other hand, treats consumers well, and consumers come back to the site. Apple stores have authority, because Apple has created the impression in people's minds that you can go to the store to get your electronics needs fulfilled.

The other variable is price. jrockway commented here that he wouldn't buy a $60 USB cable from Best Buy. Why? Because he knows USB cables are much cheaper online, new or used. The problem here is price and authority. Best Buy reduces their perceived authority when they sell generic goods obviously overpriced. Best Buy is selling cheap goods as expensive goods; their biggest obstacle to success is people's knowledge that Best Buy is overcharging you. That is the symptom (not the cause) of their issues; knowledge for most people is irreversible.

What does Best Buy actually need to do? Get their authority back. Give people a reason to come back to Best Buy. Actual customer service goes a long way.