Best Buy’s Online Pricing Tactics Under Scrutiny

Electronics retailer Best Buy is being investigated for allegedly using two different Web sites to sell merchandise online, including one that may have led to some consumers paying higher prices.

The office of Connecticut Attorney General Richard Blumenthal is looking into the alleged bait-and-switch tactics, though it has not confirmed that a formal investigation is under way.

The inquiry was sparked by published reports suggesting that when some Best Buy stores customers inquired about lower prices they had seen on the company’s Web site, they were shown a second Web site that was apparently part of a Best Buy intranet where the same products were shown with different prices.

The issue came to light when The Hartford Courant published the account of a teacher who attempted to buy a Toshiba laptop for the US$729.99 price advertised online, only to find that the price was $879.99 in two Best Buy stores.

The confusion apparently arose from employee error, Best Buy said, and that employees are trained to use the public Web site when comparing prices.

Though the company is not mandated to honor Web prices in its stores, Blumenthal said he’s interested in knowing whether or not consumers were drawn into stores and then sold goods at higher-than-advertised prices.

Not a Match

Although product pricing is identical in most cases, unlike some retailers Best Buy does not necessarily honor Internet pricing in its stores.

The BestBuy.com Web site carries a disclaimer notice stating that “Online prices and selection generally match our retail stores, but may vary.”

Still, the fact that consumers had to press to get the lower price is “troubling,” Blumenthal said, adding that his office has asked Best Buy for additional information on their policies and procedures.

The attorney general’s office says it has received some 20 additional complaints of the same practice and that in many cases, employees showed the customers a Web site that appeared identical to the BestBuy.com public site — but it carried the higher prices.

Best Buy also said that the Web site prices are national prices and that regional prices may vary.

The largest consumer electronics retailer has faced regulatory scrutiny before, with several states reporting complaints that the chain failed to honor rebates or its own return policy.

Multichannel Challenge

Though the problem appears to be confined to Best Buy, the challenges of being a multichannel merchant are well known across the retail landscape.

Even today there remains a variety of models for the approach, with some retailers operating almost entirely separate online businesses and others closely blending the two. That could lead to some consumer confusion, Forrester Research analyst Carrie Johnson told the E-Commerce Times.

“There is no one model that consumers consistently find when seeking out the brands they trust online,” Johnson said.

Meanwhile, merchants themselves must figure out how closely to align their various retail strategies.

For some retailers, selling from stores is inherently more expensive than direct online sales, especially in instances where merchandise is shipped directly from a supplier or a regional distribution center.

Electronics retailers have found that the online channel can be extremely valuable, especially for prepurchase research. Analysts have been tracking a trend that sees more consumers comparison-shopping online and then completing purchases in stores.

Many stores have also found success by allowing shoppers to pick up items bought online in stores or to return items bought online at retail outlets.

“A lot of investment has been made to align various channels, but it can take time to find the approach that works for any given retailer,” Johnson said.