Best Buy Co. Inc. (NYSE: BBY) offers sharp discounts on some of the items sold at BestBuy.com. There are several reasons the consumer electronics retailer may do this. Among them are clearance of inventory which would not sell quickly without discounts, a method to bring in customers who might buy other items on which Best Buy makes large margins, or a means to keep pace with online sales by Amazon.com Inc. (NASDAQ: AMZN).
The sales have three components beyond discounts. Best Buy “Hottest Deals” come with “free store pick-up,” which would appear to have no benefit to customers, “free shipping” for items which cost $35 or more, and a deal whereby Best Buy will match deals from its competitors. It is not entirely clear how long this “free shipping” takes. Best Buy lists standard shipping at three to seven business days.
Since few people outside Best Buy and its vendors know what the retailer spends on each item, it is hard to say whether discounted items are sold at a profit.
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