- Best Buy offered 0% financing for 18 months, allowing me to consume my future earnings today. Had they not offered this, I would have gone across the street to Sears for a similar offer.
- The home theater systems and blue ray players, major items, were sold at very competitive prices. I know this without having to visit multiple competing retailers, because I did my homework online. Since most people do their homework on large major purchases, everyone gets this low price.
- Like most retailers, Best Buy makes its profit on the cross selling of high margin items (warranties, cables, etc). This works because folks like me do their homework on the major items and forget about these supplementary items.
- I use my cell phone that has Internet Explorer, a recent innovation for cell phones, and check what Amazon retails these supplementary items. I find that Amazon will ship to me the wall mount at a price 54% below Best Buy's, and HDMI cables at 20% of Best Buy's price.
- I inform the Best Buy rep of this discrepancy, he informs his manager, who then matches the Amazon price. Total savings is about $154 on both the wall mount and HDMI cables.
- The $154 was my cell phone's marginal product, roughly equivalent to 5 months of payments I make on the phone.
Wednesday, April 08, 2009
I Heart Capitalism
I recently purchased a several products from Best Buy for my new house. The entire process of shopping there illustrated the many wonders and benefits of competition.