
Spolsky: Why Circuit City Failed, and Why B&H Thrives - wyday
http://www.inc.com/magazine/20090501/why-circuit-city-failed-and-why-bh-thrives.html
======
raganwald
I love the CEO blaming the economy. When times are good, these weasels take
home bonuses for their managerial success. But the moment things go wrong,
they are right there blamestorming everyone and everything else.

Schmucks.

~~~
dugmartin
"blamestorming" - my new favorite word of the day.

~~~
raganwald
My understanding is that the word describes a particular kind of group
behaviour where everyone is blaming everyone and everything except themselves.
So I misused it to describe a CEO blaming other people, it would be more
accurate to think of a management meeting where the CEO, PResident, and
various VPs are all weaseling out of responsibility by trying to pin it on
something else.

Vehemently!

A colleague introduced the phrase to me in conjunction with Hurricane factors.
So walking into a meeting to discuss why a particualr release was late, he
would whisper to me, "Stand by for a Force Three Blamestorm!"

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stuff4ben
While B&H rarely has the _best_ online price, they always have a _fair_ price.
Typically you can see other online retailers undercut B&H in price. However,
B&H has the upper-hand in customer service and advice which, to me, is worth
the extra premium. When comparing against regular brick and mortar stores, B&H
beats them hands-down.

~~~
maukdaddy
Exactly. A good example of not competing on price alone, but overall value.
I'll gladly pay a little more to order from their website vs. some fly-by-
night yahoo store.

Any time I'm in NYC I try to visit B&H just to absorb the atmosphere and play
with all the awesome toys.

~~~
stuff4ben
I've ordered several thousand dollars worth of equipment from them but have
never been to their store. Would it be odd that I plan a trip to NY just to
visit the B&H store?

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maukdaddy
Absolutely not! Anyone who is a B&H fan should plan a pilgrimage to NYC at
least once =)

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chops
_The most amazing thing is that the prices are so low that I don't even bother
to comparison-shop anymore._

This is how I feel about Newegg.com. I used to be a daily visitor to
pricewatch.com, which compares the prices of electronics, until I found myself
regularly ending on up Newegg, and decided that it was easier to just hit
newegg directly. Now I buy almost all my gear from them.

~~~
jrockway
I feel the same way about Amazon. I find myself there for everything; books,
MP3s, electronics, even parts for my bike. They are usually pretty reasonable
price-wise, and since I have Prime, I know I will get my item in a day or so.
It's wonderful. (No more dealing with places that have good prices, but ship
your stuff whenever they feel like it, like a week after you order. With
Amazon, you always know how long it will take, and that they are not
absconding with your money.)

~~~
weaksauce
I must second the notion that amazon + prime gives me 85% of my online goods.
Newegg is still better at most of the nuts and bolts computer hardware stuff
but not by much. I was frequenting pricewatch but found it a waste of time to
evaluate a new vendor for such a marginal price difference(am I going to get
my parts, are they going to sell my credit card number, How long is it going
to take for ground to get to me, etc....)

Overall happy with paying a bit(not much) more for a lot more convenience and
speed.(newegg gets to me in a day if I purchase by noon to noon-thirty, amazon
in two.)

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coglethorpe
"I had read on the Consumer Reports website that Circuit City's liquidator had
actually raised the price on many items for the going-out-of-business 'sale.'"

That I can believe. I made the mistake of going in to Circuit City's going-
out-of-business sale to find a wide screen TV, only to find they were all at
least $200 more than I'd spend at Sam's Club or Costco. It seemed they had no
care if they sold any merchandise whatsoever.

~~~
noodle
this is how pretty much every liquidator operates. if you see a "going out of
business" sign, avoid it at all costs.

all the "good" stuff will be marked up to or past MSRP and then marked back
down again to the level of their original costs just so that they can legally
advertise huge-sounding discounts. they mark something up so that they can
then put a "30% off" sticker on it and run an advertisement, despite the price
not actually changing.

you won't find anything worth buying until the final days when they really do
discount items. but by then, the "good" stuff is gone because the liquidators
have tricked unwitting consumers into buying it up.

~~~
dugmartin
Don't confuse markup with discount. A $1 item that is marked up 30% and then
given a 30% discount has a final cost of 91 cents.

~~~
noodle
good point, after re-reading i didn't word things how i meant. edited.

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jdfreefly
B&H - Knowledgeable sales people. Honest business practices. Lowest prices or
competitive prices.

Circuit City - Clueless sales people, (I was once told that a laptop I was
looking at "has to run vista because of the drivers that are installed"),
dishonest business practices and prices that are guaranteed to be
significantly higher than what you see in other places.

The question is will B&H become a victim of its own success? As Joel says in
the article, he doesn't even comparison shop anymore. I've been using B&H for
years, and while I don't comparison shop, I almost always go with B&H because
of their terrific customer service and I always know what I'm getting (none of
that annoying "well, you know this model doesn't come with a battery"
bullshit).

My experience tells me that eventually something will change in the mindset of
the org, either the guy calling the shots will start to cash in on those years
of trust, or his son will take over and he will cash in, or they become a
publicly traded company where the board members care more about next quarters
profits than a long term sustainable business. I would wager Joel's article
will accelerate that process.

That makes me wonder...perhaps the publicly traded corporate structure is not
conducive to a company that wants to win on price, quality and customer
experience.

~~~
redrobot5050
Tell that theory to Apple's board. They seem to be doing alright.

~~~
jimbokun
The key, I think, is that Jobs is a strong enough leader to ignore his
shareholders and the Street. Had they heeded the "conventional wisdom" of the
financial press, Apple would have ceased as a going concern long ago.

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jasonkester
FYI, the actual article is here:

[http://www.inc.com/magazine/20090501/why-circuit-city-
failed...](http://www.inc.com/magazine/20090501/why-circuit-city-failed-and-
why-bh-thrives_Printer_Friendly.html)

That will save you an interstitial ad and 30 seconds of page load before the
"printer friendly" link shows up.

Somebody might want to re-point the item.

~~~
spatulon
That format may be printer-friendly, but it is significantly less readable on-
screen. The text fills the browser window, making each line far too long to
read comfortably.

Bloated pages (both visually and in terms of file size) are a problem, but
linking directly to printer-friendly pages is not a suitable fix, IMHO.

Avoiding advertising also bothers me (even more than the actual advertisements
bother me) in general, because I like information, and information generally
costs money to acquire - especially high-quality, reliable information.
Newspapers and their investigative journalism appear to be going away, and
that makes me sad.

Note: I'm not familiar with Inc. magazine, so discussing quality journalism
may or may not be entirely relevant in this context.

~~~
Nwallins
> The text fills the browser window, making each line far too long to read
> comfortably.

This is easily rectified by a single click and drag to resize the browser
window to your preferred column width.

I for one much prefer print links for reading articles.

~~~
octane
I would rather click zero times and just read the damn thing.

If you don't like ads, block them. I like well formatted text that doesn't
require user intervention every time I go to a new page. That's sort of the
entire fucking POINT of web design.

~~~
Nwallins
> I like well formatted text that doesn't require user intervention every time
> I go to a new page. That's sort of the entire fucking POINT of web design.

I totally agree. Unfortunately, many commercial pages present poorly-formatted
text framed by blinking or brightly-colored distractions. I exercise a bit of
user intervention to load the print link -- I just want the text, and I can
size the column(s) easily.

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edw519
"...in order to reduce shoplifting and employee theft..."

Shoplifting, maybe. Employee theft, no. The Hasidim already have the world's
best deterrent to employee theft: you are banned for life from the community.
Period. No warnings. No discussion.

Imagine if wall street had that rule.

~~~
param
I am sure that its just the owners who are Jews. Employees would be regular
folks, and theft just means getting fired - no different from other stores.

~~~
cjbos
I think all employees are Jewish as well, or at least I haven't seen a non
Hasidic Jewish guy behind the counter any of the half dozen times I've been in
the store.

~~~
joshwa
While the majority of the salespeople and staff are jews, there are also
plenty who are not. All walks of life-- anyone you'd normally see on Ninth
Avenue is represented on the B&H staff.

(including that snotty bastard in the studio lighting department-- B&H
salespeople can be a little brusque)

I've probably spent upwards of $10k there over the years-- just bought $200 in
grip on Sunday.

------
AndrewWarner
I wonder if someday, someone will ask why Inc failed, and the answer will be
that they put big splash screen ads in front of articles.

I love this article. Thanks for posting it wyday.

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anigbrowl
Something missing from this article and the commentary: B & H specializes in
professional a/v equipment. Sure, they sell to the general public and they
sell many consumer-level items as well.

But go look at their web page: <http://www.bhphotovideo.com/> "The
Professional's choice' - lots of high end cameras and camcorders, and so
forth. A majority of their customers are highly knowledgeable as well, and
they have a long-established reputation in the pro film/video community as a
reliable supplier. That means they can sell a lot of items with a huge markup,
because the customers are not looking for the best deal, but are willing to
pay more for both customer service and equipment with lots of features.
Although B&H caters to the general consumer, they probably don't make their
biggest profits in that sector.

This is a very significant difference, and rather undermines the analysis in
the article. It's like comparing a Ferrari dealership with a Ford one, or a
professional medical supply business with a drugstore chain. There are useful
lessons to be learned, but they're very different business models which (as
commented) don't necessarily scale to different markets. If B&H were primarily
targeting the general consumer, the overhead costs of educating every
potential buyer would skyrocket.

Incidentally, the bit about the item being delivered to the counter where it
is inspected, and then delivered to the point of sale etc. gave me quite a
chuckle. Minus the high-tech and conveyer belts, this was _exactly_ how
department stores in the Soviet Union operated when I visited there in the
1980s. In fact it was one of the things you'd find in guidebooks - 'those
crazy commies - they hate capitalism so much that they make the process of
buying something wildly inefficient!' I would never have imagined I'd see this
model praised in the pages of _Inc._

~~~
htrbtrb
But it is efficient. It's like the system in Starbucks (there's a company that
knows efficient) rather than the coffee shop where you have 6 people fighting
over a single coffee machine and then the same six fighting over the till.

~~~
anigbrowl
True, but that's a process rather than a normal retail model. I mean, compared
to pick something off the shelf and take it to the register.

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marcusbooster
B&H is a fine store, but comparing them to Circuit City is not apt. They
operate more like Amazon than any brick-and-mortar store -- the vast majority
of their product is shipped online.

And customer service isn't exactly what comes to mind when thinking about B&H.
The operation is run to be efficient and maximize profit not to enhance the
"customer experience", though often the two intertwine.

They've found a good niche but if they tried to put one of these stores in
every city across the country, as they say, "it wouldn't scale".

~~~
voidpointer
Why exactly wouldn't it scale? The challenge is to make sure other stores are
run in the same dedicated fashion and not by some dimwit that only hires other
dimwits in order to cut costs. Retail chains seem to become prone to this once
the whole organization gets big enough to put in place metrics that measure
store performance mostly on a revenue basis and those in charge start to
manage by the metrics instead of looking at reality because there is no more
incentive for them to do just that.

~~~
marcusbooster
It just doesn't make sense to add more operating costs when your product is
shipped online.

But there's also the place it has in the community. From their Wikipedia
article (so take it for what it's worth): "Surpassed only by the Diamond
District in terms of Orthodox employment, the company is a vital part of the
community's financial health, with hundreds of Orthodox Jews on staff."

That doesn't scale either.

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quizzical
This is a strange article to give much attention.

He states that he doesn't actually know how B&H is doing financially so there
isn't any proof that they are a successful business other than his description
of personal experience. He states that they are not open for business as much
as they could be which I would find annoying as a customer. The site shuts
down that often? You gotta be kidding me.

Any business trying to compete on thin profit margins and/or is too dependent
on loans to keep their business running is certainly not going to thrive in
this economy. Unfortunately, I don't think customer service will be the
deciding factor for many companies right now.

But yeah, as far as personal experience I avoided Circuit City too as the only
experiences I had were so negative. I wouldn't say other stores like Best Buy
have any more than a tolerable customer experience on average.

~~~
ShabbyDoo
You can browse the site on Saturdays -- you just can't place an order until
sundown (sunset? I don't know the rules).

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wglb
I love the phrase "aggressively unknowledgeable".

I have ordered much stuff from them; would love to visit them in person
sometime.

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paul7986
I could not read that article due to the ad with the dude with the bug eyes
staring straight at me. It annoyed and irked me. Yes may seem odd, but maybe
Im not alone with this thought?

~~~
jodrellblank
That's not an ad, it's a picture of the author - Joel Spolsky.

~~~
quizzical
You mean that dude's name isn't "Related Content"? :)

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weegee
I've purchased a lot of gear from B&H. This article is a little inaccurate,
B&H opened in the late 1960s, my father bought his Nikon F FTn from them
through the mail in 1969 and I still have the receipt for it.

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dmh2000
'Sony Guts!'

