B&M vs. Amazon: The Online Sham
A commenter wrote the following as a reply to my previous post (and I will deal with 1 fact after another):
"Wow, where to start with this?
1) AMZN has customer loyalty because of its best-of-breed front end. Billions of people who use Amazon have never heard of Gamestop and will go to Amazon first, last and always for all their online shopping."
Best Buy has Customer Loyalty.... Gamestop has Customer Loyalty.... How is Amazon Customer Loyalty matter worth squat?
Gamestop signed up 8 million customers in the 2 quarters or less since starting their loyalty program.
They now have well past 10 million since last Earnings Report, reported on it, months ago.
Right.. "For all their online shopping." Not hardly... Both Best Buy and Gamestop have plenty of customers in their Online Shopping.
IMPULSE started off with 2% marketshare of online game shopping before Gamestop acquired them and started adding sales deals, preorder deals, and a much larger library of games to the Impulse database. Not to mention In-Store PC Digital has just been announced.
How much growth is there in AMZN if supposedly BILLIONS already shop there?
"2) A lot of those loyal customers have Prime shipping. Some even get it granted to them free. Amazon calls this '2-day' but most of the time the shipment arrives the next business day. Cut out the 30 minutes spent driving to and from a bricks and mortar store, and looking for parking, and I come out way ahead."
Yippe!!!! Prime Shipping!!!!
Oh wait.... Best Buy and Gamestop have prime shipping as well... It is 2 day shipping.
The only thing is you do not have to be a regular, POWER shopper, to qualify for Gamestop's
2-Day shipping for free. Everyone is entitled to it off purchases of $75 or greater.
"3) Whereas Gamestop is levered to the game industry, if video games disappeared tomorrow Amazon's profit margin wouldn't even notice."
Gamestop is working to "lever" itself to Tablets having already put together a Tablet Refurbishment program and hinted at possibly pursuing making their own Gaming Tablet.
Just as MOVIES aren't going away.....GAMES aren't going to go away. Hardware Sales (Console Systems) are up double digits and Microsoft's Kinect has been the fastest selling accessory in history from any industry standpoint.
Amazon barely has profit margins to lose.... They are operating off 2% Operating Margins....A Massive decline from a historical perspective with Amazon.
I am sorry... But losing the Games Industry for Amazon has a much larger impact than you think when Amazon can not afford to ERODE Margins much further while Expenditures are outpacing Sales.
"4) You can use an Amazon gift card to buy darn near anything. Try buying laundry soap with a Powerup, or whatever you call it."
How am I suppose to load SOAP into my XBOX 360? Try buying a BOOK off KINDLE with your Amazon Gift Card! (rofl!)
Best Buy's RewardZone Mastercard also had restrictions on their gift certificate deals if I am not mistaken.
But, if Gamestop expands into Tablets.....and other areas in the future as the C.E.O. has been hinting at then the amount of items your Certificates help pay for grows.
"5) It is cheaper for me to buy some things via Amazon's Subscribe and Save and have them shipped to me: soap, toothpaste, other staples; then it is for me to buy it at my local discount warehouse."
Really? Not hardly.
If CVS Pharmacy can undercut AMAZON on pricing then just imagine what GAMESTOP and
BESTBUY do on a regular basis?
AA Batteries through Amazon's wonderful "Subscribe and Gouge"
$12.45 (28 count Duracell AA Batteries. Amazon doesn't have its own branded products)
$11.49 (24 Count CVS Alkaline AA Batteries)
So how much is that BAR of SOAP you bought at Amazon through Subscribe and Gouge?
DOVE Sensitive Skin Soap (14 Count) $14.44
CVS Gold Soap or Irish Spring Deodorant Soap (8 Count) $4.99
Buy 2 for (16 Count) at $9.98
SUBSCRIBE AND SAVE MY BUTT AMAZON!!!!
Let's shift gears to Best Buy!
How's about a 12X Internal Blue Ray (Multi) Drive Re-writeable from LG Electronics?
Best Buy has one for $130 as I was at their store 1 week ago.
http://www.bestbuy.com/site/LG+-+12x+Internal+Blu-ray+Disc+Double-Layer+DVD%26%23177%3BRW/CD-RW+Drive/2979007.p?id=1218369110925&skuId=2979007&st=Blue Ray drive&cp=1&lp=5
AMAZON Subscribe and Gouge? NOTHING!!! Subscribe and Gouge I guess doesn't include electronics.
But, no worries!!
Pretty sure if I search for the product Best Buy has, I will find one for less at Amazon!
Nope..... Amazon doesn't even sell this item. They primarilly sell the 10X - 8X varieties.
"6) Loyal Amazon customers get other rewards, like Vine, Associates, and so on.
Every time I've looked at AMZN stock since 1994 I've thought, man, that's crazy overvalued. But boy how I wish I bought some at most of those times. Can you really say that about Gamestop?"
Yes you can really say that about Gamestop. Gamestop first appeared as a tradable stock by itself in the early-mid 2000s. Since then the Stock SPLIT, twice! While the company has been buying back shares by the boat load.
Amazon obviously doesn't split their stock. So comparing share price without consideration of Gamestop Stock Splits is misleading.
Correct me if I am wrong but BEST BUY does Stock Splits as well.