1. Best Buy continues to gain market share in the consumer electronics market despite Amazon's strong financial performance and growth. 2. While Amazon is well-positioned to meet customer needs for low prices and wide selection, it is ill-suited to provide the physical and immersive experience that many customers prefer. 3. Amazon has diversified its business beyond retail through investments in areas like Kindle, Amazon Web Services, and new business models like marketplace, expanding its revenue sources.

1. MW-CH4107-20061025-106Competitive overviewConnected World/Global Web March 30, 2010

2. 1Best Buy continues to gain share in the overall CE market despite Amazon’s impressivebusiness and financial performance1Amazon is well positioned to deliver against customers’ needs for low prices and wideassortment, but ill-suited to provide the physical immersive experience they prefer2Amazon has made enhancements to their existing businesses and continues to create newbusiness models and profit pools, including marketplace, Kindle, and Amazon Web Services3Despite their impressive performance, Amazon has limitations and risks, includingimpending changes to state sales tax laws and new competitive pressures4Amazon executive summarySOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

3. 2Amazon.com consistently outsells Bestbuy.com in every major product category except laptops, where Dell dominates, Best Buy is second, and Amazon trails in third

4. Amazon.com has over 60% share in movie sales and over 70% in music; entertainment overall is Amazon’s strongest category as they have 50% market share compared to Best Buy’s 5%

5. Best Buy has made strides in A/V equipment, which includes TVs, gaining four points of share year over year and actually beating Amazon in 4Q09Amazon outpaces Best Buy in online CE share growth…1Online market share, CEPercent of marketAmazonBest Buy032002070809060504SOURCE: Comscore

6. 34…but despite Amazon’s rapid online growth, Best Buy continues to outpace Amazon’s overall share growth in the CE market1Net share gain(2004-2009)US Market share% of total CE market (offline and online)CAGR44%3.7%0.70.81.42.33.44.43%2.0%5%6.0%Otherretailers-4%-11.7%66.365.565.263.459.353.505062004080907SOURCE: Stevenson Traqline

7. 4yAmazon’s consistent revenue growth and healthy operating cash flow have earned it an industry-leading earnings multiple1AmazonBest BuyTotal revenue$ BillionsAvg. stock price$ per share+11% p.a.Amazon120+32% p.a.49.745.040.08035.924.519.214.810.740BBY09080720060Mar10JanNovSepJulMayMar09Operating cash flow $ BillionsAmazon’s ability to drive revenue growth with creative business models and produce incredible amounts of cash make them an attractive play to Wall St.

8. When combined with their flexible and compressed SG&A structure, Amazon becomes an investment that commands a high multiple

9. AMZN currently trades at 65x earnings, far ahead of any competitor, including BBY at 14x, Apple at 23x, and Walmart at 15x+3% p.a.+67% p.a.0908072006SOURCE: Company financials

10. 5Amazon’s performance is driven by their ability to keep SG&A costs low, a result of their flexible SG&A structure1SG&A costs% of salesAmazon SG&A costs% of sales-1% p.a.20.2%19.8%19.3%19.1%18.8%Fulfillment 0%8.4%1.7%Marketing 2.8%07080620052009Technology andcontent1.2%5.1%Best Buy SG&A costs% of sales+1% p.a.9.3%Stores**0%21.3%20.8%20.3%19.7%19.8%Other generaland administrative7.2%1.3%Total SG&A19.4%17.6%20050706200908 * Figures are for year ending Dec. 31, 2009 for Amazon and Q3 projected fiscal year 2009 for BBY ** Stores includes store labor, rent and taxes, but does not include D & A Source: Amazon 10-K, BBY internal data

11. 6Best Buy continues to gain share in the overall CE market despite Amazon’s impressivebusiness and financial performance1Amazon is well positioned to deliver against customers’ needs for low prices and wideassortment, but ill-suited to provide the physical immersive experience they prefer2Amazon has made enhancements to their existing businesses and continues to create newbusiness models and profit pools, including marketplace, Kindle, and Amazon Web Services3Despite their impressive performance, Amazon has limitations and risks, includingimpending changes to state sales tax laws and new competitive pressures4Amazon executive summarySOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

12. 7Amazon continues to win on price…and product assortment2Price comparison by SKUs1Percentage; 2010Price per SKU of DSLR cameras, 10-11MPUSD; 2009TiedBest Buy lower82Amazon lower1 Based on a price comparison of 128 overlapping SKUsSOURCE: Best Buy Competitive Strategies Group

13. 8But fails to meet many other customer needs…2% of online shoppers who consider it importantWhy Amazon is ill-equipped to address itWithout physical stores, Amazon has no way of getting it’s inventory in the hands of customers pre-purchase

14. Amazon cannot offer the “connected” experience of showing how products interact; you can buy a router and a home theater system on Amazon, but you can’t see it at work Physical inventory to handle and experienceXX%Amazon has no Blue Shirt equivalent and has no face-to-face interaction with their customers

15. Even if Amazon were to implement an online customer-facing sales force, they would be unable to demonstrate products in the same way an in-store staff can Experienced and knowledgeable staff to answer questionsYY%To return an Amazon product, a customer is forced to ship the product back to Amazon’s warehouse

16. This becomes especially problematic around the holidays as purchases have a higher likelihood of being returnedPhysical store for returnsZZ%While Best Buy can offer service and installation packages with devices sold in-store, Amazon is unable to offer in-house servicing

17. As more consumers look to buy “connected world” solutions, having a trusted in-house installation and service offering is an increasingly important factorIn-house service offeringVV%

18. 9m=XAlthough consumers spend more time per visit on Bestbuy.com, they visit Amazon more often, resulting in 4x as much time spent on Amazon.com per month2Time on site per visitMinutes+37%Time spent on site per monthMinutesAmazon.comBestbuy.com-74%Number of visits per monthNumberAmazon.comBestbuy.com-81%Amazon.comBestbuy.com Source: iConsumer clickstream analysis

19. 10mAmazon’s conversion rate among online shoppers is higher than Bestbuy.com, and we are losing significant value to Amazon 2…moreover, estimates suggest we lost $570M in value to Amazon last year…and of those that make a purchase at BBY or AMZN, 75% go to AMZN…29% of Bestbuy.com visitors also visit Amazon…Where BBY.com visitors make their purchasePercent; 2009Lost value from bestbuy.com visitor non-buyers$ MillionsTotal BBY.com visitorsPercent; 20091001002,000Also visitAmazonBestbuy.comAmazon.com57029Dell.com537VisitBestbuy.comonly213Walmart.com75Amazon.com71680All othersTotal BBY.com visitorsVisitors that do make purchaseDollar Share Source: iConsumer clickstream analysis, Comscore

20. 11Best Buy continues to gain share in the overall CE market despite Amazon’s impressivebusiness and financial performance1Amazon is well positioned to deliver against customers’ needs for low prices and wideassortment, but ill-suited to provide the physical immersive experience they prefer2Amazon has made enhancements to their existing businesses and continue to create newbusiness models and profit pools, including marketplace, Kindle, and Amazon Web Services3Despite their impressive performance, Amazon has limitations and risks, includingimpending changes to state sales tax laws and new competitive pressures4Amazon executive summarySOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

21. 12Originally a pure-play retailer, Amazon has built a diversified set of businesses through internal development and M&A3Brands/products/acquisitionsStrategyaAmazon continues to fulfill Bezos’ original mission to sell to any consumer any product at any time by expanding their product assortment (Amazon Fresh), acquiring new retail outlets (Zappos), and creating new business models to leverage third party vendors and affiliates (marketplace and Amazon Associates)E-commerceMarketplacebComputing servicesEC2 CloudData storage (S2)Amazon Web Services’ computing solutions not only provide a high-margin auxiliary revenue stream, but also lay the groundwork for potential consumer solutions based on the cloud experience

22. Amazon’s SVP of Web Services proclaimed that “Amazon at it’s heart, is a technology company”CloudFrontcInformation/ Social ntwk.From early on, Amazon has incorporated large amounts of information into the e-commerce experience in the form of product reviews and collaborative filtering

23. Aware that customers value this radical transparency that information provides, Amazon has invested heavily in information sites, like IMDb and Alexa, as well as social networking sites like ShelfaridWith the Kindle, Amazon revolutionized the e-book, connecting to consumers to content and realizing steady revenue streams in the process

24. Additionally, Amazon has made an effort to expand their other downloadable media offerings, inlcuding Amazon MP3, which current offers over 8 million songs, and Amazon Video on Demand, which offers streaming movies and TVDownloadable media

25. 13sAmazon drives revenue from a variety of sources, although traditional retail still provides over 50%3Amazon revenue breakdown$ BillionWeb Services & Others$24B0.5Web Services & OtherRevenue from Amazon Web Services, which provides storage, cloud computing, database, payments, and other products

26. Drives ~1-2% of profitability3.6AffiliatesAffiliatesRevenue from third parties that use APIs to sell Amazon’s inventory

27. Drives 10-12% of profitability (post-commission)Marketplace7.7MarketplaceRevenue from selling third-party merchants’ inventory on Amazon.com