Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 10 pages
Data source: Published sources
Share a link:
https://casecent.re/p/66302
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Abstract
Best Buy, Wal-Mart and Circuit City are the top three consumer electronics retailers in the US. Over the years, Best Buy and Circuit City have built a reputation for selling quality goods along with high value customer assistance at the point of sale. However, due to commoditisation, profits at the retailers are fed not by the low margins on electronics goods but by commissions earned on warranties sold along with the goods. Wal-Mart, although a leading electronics retailer, only started selling warranties in October 2005. This case study, while highlighting the importance of warranty revenues to the bottom lines of Best Buy and Circuit City, offers scope to discuss the threat posed by Wal-Mart to the revenue models of these two companies.
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Abstract
Best Buy, Wal-Mart and Circuit City are the top three consumer electronics retailers in the US. Over the years, Best Buy and Circuit City have built a reputation for selling quality goods along with high value customer assistance at the point of sale. However, due to commoditisation, profits at the retailers are fed not by the low margins on electronics goods but by commissions earned on warranties sold along with the goods. Wal-Mart, although a leading electronics retailer, only started selling warranties in October 2005. This case study, while highlighting the importance of warranty revenues to the bottom lines of Best Buy and Circuit City, offers scope to discuss the threat posed by Wal-Mart to the revenue models of these two companies.