Consumer Electronics
Best Buy vs Amazon
February 14, 2016 8:35 am
Last Updated: January 13, 2020 1:13 pm
Best Buy Co. Inc. (NYSE: BBY) was founded in 1966, under the name of Sound of Music. Amazon.com Inc. (NASDAQ: AMZN) was founded in 1994 by CEO Jeff Bezos. It is common knowledge that the fortunes of the brick-and-mortar company have collapsed and the e-commerce company’s revenues have surged. Several figures about each company show just how dramatic the shift has been.
Best Buy has 1,400 stores and 125,000 employees. That number has shrunk and will continue to do so as same-store sales soften. Amazon has 222,400 employees and continues to grow, according to GeekWire, which reported in October 2015:
The Seattle e-commerce giant added 39,300 employees during its most recent quarter, which is record quarterly growth for the company. Amazon’s headcount also surpassed 200,000 for the first time and is now at 222,400 — that’s up 49 percent from this time last year.
In its most recently nine-week period, which ended January 2, Best Buy reported that revenue fell to $11 billion from $11.4 billion in the same period a year ago. Comparable store sales dropped 1.4%, compared to an increase of 2.6% in the same quarter a year ago. Hubert Joly, Best Buy chairman and CEO, said “Online revenue increased 12.6% on top of a 13.4% increase last year. In addition, we saw a significant improvement in our Net Promoter Score.” Best Buy will need to do much better than that to increase its market share in electronic device e-commerce.
In its most recently reported quarter, Amazon’s revenue rose 22% to $35.7 billion. The Best Buy and Amazon numbers are not exactly compatible, since the Best Buy number is not a full report of quarterly results.
Amazon has several advantages over Best Buy, the most significant being its Prime plan, which gives subscribers a measure of free shipping and unlimited access to a massive vault of video and music for $99 a year. Amazon’s results are also bolstered by its cloud Amazon Web Services, which has put it into an entirely new business in which it has the market share lead.
The best measure of the two companies is their five-year revenue trajectory. In 2010, Best Buy’s revenue was $50 billion, which has fallen to $40.1 billion in the most recent trailing 12 months. In 2010, Amazon’s revenue was $34.2 billion. Most recently it was $107 billion.
A wild change of fortunes.
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