Best Buy launches a new $200 membership program to fight Amazon

Best Buy has a new plan to hold on to shoppers in the crowded...

Posted: Apr 7, 2021 8:19 PM
Updated: Apr 8, 2021 9:40 AM

Best Buy has a new plan to hold on to shoppers in the crowded electronics market.

The retailer said Wednesday that it was piloting a $199.99 annual membership program with free device installations, a concierge service for tech support and other perks. The program, Best Buy Beta, will be available at around 60 Best Buy stores in six states by the end of this month. It also includes free shipping without order minimums, extended return windows and exclusive sales.

Best Buy has adapted to competition from online players like Amazon by beefing up customer service and positioning itself as the expert in TVs, computers and other electronics. This membership offering is the latest example of the company's approach to win customers, said Michael Baker, a retail analyst at Davidson & Co.

With the new membership, he said, Best Buy is targeting customers who 'have more devices and technology in their home, but have trouble understanding it all and need help.'

Best Buy is also looking for ways to add new revenue streams other than product sales. A membership is appealing because it can generate recurring fees from customers.

Amazon has popularized the membership model in retail with Prime, which currently costs $120 a year, and other retailers have followed its example. Walmart last year debuted Walmart+, a $98-a-year plan that includes free shipping on items $35 and over and same-day grocery delivery.

Best Buy currently has another, more limited membership program, Total Tech Support, that it launched in 2018. The new membership program will replace Total Tech Support in the the six states where it's launching, and Baker expects to one day fully replace the prior concept.

'You need to keep making these subscription offerings more attractive to customers,' said Baker.

Best Buy is launching the membership after a strong year in the pandemic. The retailer saw a surge in sales of items from laptops to kitchen appliances as more Americans worked and cooked at home. During its latest quarter ending Jan. 30, comparable sales, or those at stores open for at least one year, increased 12.6% compared with the year prior.

Best Buy expects demand to slow this year, however. It estimates comparable sales growth to be anywhere from down 2% to up 1% in 2021.

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