Best Buy is the latest retailer to attack Amazon Prime

Brian Sozzi

The beast that is Amazon Prime is under attack as major retailers seek recurring revenue streams and look to keep legions of new customers that they gained during the COVID-19 pandemic.

Electronics giant Best Buy (BBY) is the latest to step into the ring long dominated by Prime.

Best Buy said this week it has begun piloting a subscription service dubbed Best Buy Beta. For $199.99 a year, members get exclusive pricing, unlimited Geek Squad technical support, two years of protection on most product purchases, free standard shipping with no delivery minimums, and free in-home delivery and installation on certain electronics and appliances. Members also receive extended product return windows.

It marks Best Buy's first true subscription product. The service is being piloted in Iowa, Oklahoma, and eastern Pennsylvania. Expansion is already planned for Best Buy's hometown state of Minnesota, North Carolina and Tennessee.

Wall Street analysts say Best Buy Beta shouldn't come as a shock to anyone.

"During the past 12 months, there has been a material evolution of customer shopping behavior with millions of new customers engaging with consumer electronics (many via Best Buy). Simply put, we view this pilot as Best Buy's tool to turn the billions of interactions it's had with new (and reactivated) customers over the past year into lifelong relationships by showing them the full ecosystem the retailer offers through delivery, installation, repair, and technical expertise," said Jefferies analyst Jonathan Matuszewski.

Matuszewski added, "From an execution standpoint, we believe the lowest hanging fruit will be current Total Tech Support members who currently pay $199 for a fraction of the benefits included in Best Buy Beta. Next, we believe Best Buy will be targeting less loyal customers or non-customers, including those shopping consumer electronics at Amazon (via Prime), Walmart (via Walmart+), and Target."

Shoppers enter and exit Best Buy store in Arlington Heights, Ill., Saturday, Feb. 6, 2021. Best Buy is closing five stores in four states in the next month. The retailer plans to close two Richmond, Va., area stores, along with one store each in Syracuse, N.Y., Carbondale, Ill., and Brockton, Mass. (AP Photo/Nam Y. Huh)
Shoppers enter and exit Best Buy store in Arlington Heights, Ill., Saturday, Feb. 6, 2021. Best Buy is closing five stores in four states in the next month. The retailer plans to close two Richmond, Va., area stores, along with one store each in Syracuse, N.Y., Carbondale, Ill., and Brockton, Mass. (AP Photo/Nam Y. Huh) (ASSOCIATED PRESS)

Other retailers apparently echo Matuszewki's sentiment.

The world's largest retailer Walmart launched Walmart+ in September 2020. For $98 a year or $12.95 a month, Walmart+ gives members unlimited free delivery from 4,700 U.S. stores, discounts at Walmart and Murphy oil stations, and faster in-store checkout.

Meanwhile, home furnishings retailer Bed Bath & Beyond continues to promote its relatively new Beyond+ subscription. Priced at $29 annually, it gives members 20% off their entire purchase and free shipping.

Despite the new entrants, Amazon Prime is still seen as the king of retail subscriptions given what a member gets for the price.

Prime is priced at $119 a year, and offers free delivery, access to movies and music and photo gathering (among other nuances). Amazon keeps the number of Prime subscribers closely guarded, but it reportedly has more than 130 million in the U.S. alone.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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