Nov 25, 2014 · 4 minutes

Not long ago, it seemed like Best Buy was destined to be roadkill beneath Amazon's tires. Sales at its retail stores were declining while its profits were plummeting. The company's efforts to tap into online orders Online sales wasn't working either. The stock finished 2012 below $12 a share, a decline of 77 percent over the previous five years.

Best Buy is still around today – unlike its erstwhile rival Circuit City - and its stock has more than tripled since its December 2012 low. The road back hasn't been an easy one. Best Buy's stock lost 40 percent of its value in January after weaker than expected earnings. But then again, Amazon had a bad January as well, thanks to its own disappointing earnings. Since then Best Buy has had a much better year: Its stock is trading 68 percent above its January low, while Amazon's is trading 7 percent below its January low point.

As the holiday shopping season approaches, it worth looking at how Best Buy managed its rocky but dogged recovery. It reveals subtle but significant changes in the ecommerce market that are coming as Amazon's priorities shift from the lowest-price retailer to an array of scattered and costly new initiatives.

Amazon's core priority has slowly migrated away from rock-bottom pricing toward getting as many people as possible to become Prime members. And that is creating a wedge of opportunity for other retailers, one Best Buy has been working hard to exploit.

Best Buy's quiet but steady turnaround began after the company named Hubert Joly, a travel industry executive, as CEO. Since then, Best Buy has beaten Wall Street's profit estimates for eight quarters running. Joly cut costs, pushed to improve customer service, and most importantly addressed the showrooming trend of shoppers window shopping at Best Buy and buying on Amazon.

Joly introduced a price match guarantee (with exceptions, like clearance items or those sold on Thanksgiving weekend) aimed at Amazon's low-price game. Target also adopted a similar policy to combat showrooming. Earlier this year, Joly made an even shrewder move – shipping goods from its stores, in addition to in-store pickup. In effect, Best Buy's big boxes became distribution centers that could compete with Amazon's, allowing it to deliver packages just as quickly.

Best Buy's advantages over Amazon remain spotty, however. Amazon's ratings by the American Customer Satisfaction Index is 88, one of the highest in retail. Best Buy's is a shoddier 77, underscoring the work the company has in repairing years of customer-service complaints. And while Best Buy may be aggressive in offering discounts on gadgets and appliances, it's also known for marking up prices accessories that are often bought in tandem with them.

What's more, it's hit or miss whether prices are lower at Best Buy, Amazon, or somewhere else. Instead of knowing a single retailer will consistently have lower prices, which Amazon once offered, bargain hunters need to do a lot of comparison shopping. For many online shoppers, price remains the paramount factor.

The fruits of Joly's strategies have been encouraging. In its stores, comparable sales rose 2 percent in the most recent quarter. More impressively, online sales rose 22 percent, not far from the 26-percent growth Amazon saw in its electronics division. That's up from Best Buy's 15-percent growth rate in online revenue a year ago.

Joly has been stealing pages from Amazon's playbook: deep discounts, a network of shipping centers. In last week's earnings call, Joly said the company would apply “more science” and “greater analytics around competitive pricing.” In other words, another Amazon trick: let data drive your promotions, rather than pursue deep discounts blindly.

Whether that pays off this holiday season remains to be seen. But when WalletHub surveyed major retailers about their discounts this weekend, some were slashing prices more than others. Troubled retailers like JCPenney and Sears were slashing prices by more than 50 percent. Amazon's discounts were more modest, 26 percent. And Best Buy's discounts were closer to Amazon's: 32 percent.

Amazon has also shown it's finding it harder to offer big discounts as it pushes into new, costly businesses. When Amazon reported its earnings last month, analysts fretted over how the growth rate of its media revenue declined to 4 percent from 13 percent in the year-ago period. But non-media revenue – a category long dominated by electronic goods – saw its growth rate slow as well, to 26 percent from 31 percent.

That non-media category, which Amazon calls “electronics and other general merchandise,” now makes up 68 percent of Amazon's total revenue. For all Amazon's efforts to push into TV programming and groceries, the bulk of its business is still largely tied to the kinds of goods you'll find in Best Buy.

Meanwhile, shopping trends are shifting – for example, fewer people want to shop on Thanksgiving when they can find better bargains online. But the simple online-is-killing-offline narrative is giving way to one where retailers are finding a need to balance multiple channels – as Amazon's plans to open a brick-and-mortar store in Manhattan illustrate.

Best Buy's comeback is impressive, but it's not the story of a company that is beating Amazon at its own game. Amazon still dominates in online retail and limits growth in traditional retail. What Best Buy's recovery says is being Amazon's roadkill isn't a sure thing. There are opportunities to grow as the retail market evolves. The giant's iron grip is slipping, and that leaves opportunity for other retailers, large and small.