Best Buy Launches Its Own Marketplace

Discussion
Sep 08, 2011

Best Buy is following Amazon.com, eBay, Mastercard, Sears, Walmart and others in opening an online marketplace that gives consumers access to products from other merchants in addition to its own.

According to a Financial Times report, Best Buy is responding to the development of its unintended role as “Amazon’s showroom”, the situation where consumers visit the chain’s stores with smartphones to comparison shop and eventually make their purchases online.

CEO Brian Dunn, in a statement, called the Best Buy Marketplace “a key development to our multi-channel platform … that enables consumers to shop how they want and encourages additional reasons to visit and purchase at BestBuy.com.”

ANT Online, BeachAudio.com, Buy.com, Mambate, SF Planet and Wayfair are third-party sellers that are participating in the launch of the Best Buy Marketplace.

“We know that our customers shop with us today because they trust us to connect them with the perfect match for their technology needs,” said Ray Stacey, senior director of Marketplace at Best Buy, in a press release. “We’re adding an even deeper assortment of quality brands and a greater range of pricing options for our online customers.”

Participating companies offer complementary products to those sold by Best Buy and are responsible for shipping, returns and customer service. All item purchases, regardless of the seller, will be eligible for Best Buy Reward Zone points and the company has said it will not share payment information with others selling through its Marketplace.

Jeremy Brunelli, senior analyst at Consumer Edge Research, told the Financial Times that Best Buy faces an uphill battle because of the perceptions that its prices are higher than competitors and also because shoppers are used to visiting other marketplace sites.

“It’s going to be tough,” Mr. Brunelli said. “In this world of austerity, with consumers worried about their budgets, price is the most important thing.”

Discussion Questions: What do you think about the Marketplace concept as envisioned by Best Buy? Do you expect it to effectively counter the “Amazon’s Showroom” activity?

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24 Comments on "Best Buy Launches Its Own Marketplace"


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Paula Rosenblum
Guest
9 years 8 months ago

Marketplaces seem to be like Daily Deal sites. They are popping up like weeds. In this case, I honestly don’t get it. Is the idea that getting a piece of other retailers’ money is better than no money at all?

And why would a consumer shop at Best Buy’s marketplace rather than Amazon’s, Sears or even Walmart’s? The presumption that Best Buy is editing the assortment for the customer in the best possible way? Well, that will end with the first negative review.

Feels like the company is flailing a bit. I wish BB luck, but it doesn’t feel like a winning idea.

Doug Stephens
Guest
Doug Stephens
9 years 8 months ago

It’s no secret that Best Buy had to some extent, become Amazon’s showroom. That said, if you can’t find ways to differentiate from your competition, you have little choice but to become more like your competition and clearly this is the play here.

The question is whether or not it’s a tenable and sustainable competitive position or if it makes you an also ran against Amazon. I’m personally not terribly optimistic about their chances here. There are plenty of other ways that Best Buy could have differentiated their proposition to create unique value, beyond product and price. It’s a shame we’re not seeing more imaginative strategic choices from them.

Ryan Mathews
Guest
9 years 8 months ago

In a word, “No.” Amazon has huge prime mover advantage.

I’m also not too crazy about the idea of hitching your brand image and reputation to several partners’ customer service policies.

Steve Montgomery
Guest
9 years 8 months ago

An “If you can’t beat them, join them” strategy is no guarantee for success. This effort has several factors that impede its success. As the article points out, internet shoppers already have a number of sites that they have formed a habit of visiting when looking for items. Best Buy’s price perception is another and limiting its selection to complementary items means Best Buy’s marketplace will be far less robust than what someone can access through Amazon or other sites. However, Best Buy had to do something and creating a marketplace should help slow down its sales losses to sites like Amazon.

Long term, if brick and mortar business cannot find a way to survive, consumers will be left to make purchases without ever actually having the opportunity to physically touch and try the items they are buying. That will remove a great part of the purchase process to the detriment of all concerned.

Doron Levy
Guest
Doron Levy
9 years 8 months ago

BB’s wading into territory populated with big players that know the online marketplace. It takes more than just adding vendors to a website to create a true online shopping experience. Sites like Amazon and Zappos know their customers and have created shopping experiences that get people coming back for more. BB should try to partner up with Amazon as opposed to competing head on. I always felt that BB was getting away from its core product line and should focus more on being competitive in pricing and selection.

Tony Orlando
Guest
9 years 8 months ago

It is a desperate move for Best Buy to try and keep the customers they are losing every day to the online discounters. It is a scenario that is happening everywhere across all brick and mortar retailers. The mobile generation really doesn’t care about Joe Blow the butcher down the street anymore, and unless you ramp up the value proposition, it will only get worse.

To me, it is not a good thing for everyone switching to online business, because the shopping experience still matters to the boomers, but the new money is not coming back to the street anytime soon. I see tough times ahead for many retail sectors, and all of us need to stay sharp, and develop better relationships with our current customers, or we will be gone.

Max Goldberg
Guest
9 years 8 months ago

If Best Buy is not currently offering enough value to entice consumers to complete a purchase, how is a marketplace going to help? If consumers want the item badly enough and don’t have time to wait for delivery, they will purchase from Best Buy, otherwise, if there are significant savings, they will comparison shop and buy online.

Bill Bittner
Guest
Bill Bittner
9 years 8 months ago
I don’t think that offering an online platform to competitors is going to help Best Buy discourage consumers from using them as a showroom. BB needs to think about the big advantage its store network gives them over its online competitors. One big advantage is “instant gratification.” Even if it means they have to pay the sales tax, a good sales person can entice consumers excited about a potential purchase to buy it in the store. BB should consider the store network as a service delivery platform and an in-person social networking site. Everyone knows they are not getting the most from the features in their electronic devices. Why not offer free training and product configuration classes that can be subsidized by manufacturers and used to sell accessories? Many of the online games have large followings, why not offer a game night targeted at specific games? Maybe begin an online competition and then have the top local players do a live playoff at the store. Or just as car enthusiasts show up for Corvette night… Read more »
Joan Treistman
Guest
9 years 8 months ago

I’m guessing that groceries and prescriptions are next. There’s a mad scramble among many (maybe eventually all) retailers to be everything to everyone. I think that consumers will become confused and latch onto what is simplest and easiest; perhaps what they have been doing all along.

Carol Spieckerman
Guest
9 years 8 months ago

One visit to at a Connected Store format or virtual Best Buy store on Citiville will tell you that Best Buy is pursuing a new strategy that is (much) less about selling products and more about building and leveraging platforms. In that regard, they have a lot in common with Sears; however, unlike Best Buy and Walmart, Sears and Amazon pretty much take all comers (a true platform). Best Buy won’t move the needle by micro-managing the “complementary” brands that are featured in its Marketplace. When is the last time you heard about eBags on Walmart.com?

As a side note, since when did “marketplace” become the default un-brand for online multi-brand platforms? I’d like to see a bit of originality that would have each retailer owning its particular version.

Matthew Keylock
Guest
Matthew Keylock
9 years 8 months ago

As retailers evolve in the digital world, it is interesting to see how their brands evolve. The promise to customers is becoming less about tangible/functional things and more about a value commitment and promise to the consumer.

To be successful in extending a brand, the promise must be strong and clear to consumers in the existing brand AND be reinforced in the new extensions.

Charles P. Walsh
Guest
Charles P. Walsh
9 years 8 months ago

The e-tailing world is evidently a little scary for traditional retailers today. They don’t want to miss out on this e-tailing revolution.

The fear comes from the unknown, the unknown is the question of “what exactly is this revolution and what does it mean to my company’s future?”

Like many of the panelists, I am not too sure that Best Buy’s move makes a whole lot of sense; there is no advantage that I can see other than a lemming-like desire to do what many others are doing. But to what end?

Janet Dorenkott
Guest
Janet Dorenkott
9 years 8 months ago

Ever hear of Progressive Insurance? You have, because they are doing the same thing in the insurance industry that Best Buy is trying to do today. And they are doing it successfully. I think Best Buy has a good chance of success if done correctly.

Progressive is unique to the insurance industry and was criticized years ago for doing the same thing that Best Buy is trying to do today. Progressive sells their own insurance and they also broker their competitor’s insurance. As a result, they are one of the largest insurance companies in the US. It’s a different industry, but I still think it can work for Best Buy.

Ed Rosenbaum
Guest
9 years 8 months ago

Best Buy might have waited too long to counter their perceived roles as “Amazon’s showroom.” It reads like they waited until the horse was too far gone to go chasing after it. Amazon has a commanding lead in online shopping. The “best” Best Buy can hope for is to be included in this race.

Joel Rubinson
Guest
9 years 8 months ago

Feels like they are throwing in the branding towel. I really don’t get this.

Craig Sundstrom
Guest
9 years 8 months ago

That’s nice; and it solves the primary problem of “looking, not buying”…exactly how? If insanity is doing the same thing repeatedly and expecting a different result, then clulessness must be thinking that if you try everything, something will work.

Merle Zamansky-Coen
Guest
Merle Zamansky-Coen
9 years 8 months ago

Amazon has the “Kleenex” advantage. They were first and so far, best. I would love to see this succeed, but there has to be a real, not just perceived, value.

Warren Thayer
Guest
9 years 8 months ago

Flailing. Not really differentiating. Further commoditizing the offering in the race to the bottom. I don’t see a happy outcome. Sort of like leaning into a left hook.

Ed Dennis
Guest
Ed Dennis
9 years 8 months ago

Best Buy is serving as Amazon’s showroom because they won’t or can’t match Amazon’s total value to the consumer. If I buy it at Amazon and there is a problem, Amazon fixes the problem. If I buy it at Best Buy and there is a problem, I get a runaround, PITA attitude from the Best Buy “policy” as communicated by store employees and store management.

If Best Buy would worry more about providing “no hassle” service and less about playing “gotcha” retailer, maybe fewer people would use them as a showroom. However, when you are competing with Sears, Lowe’s, Home Depot and hundreds of others for business, then I would pay a great deal of attention to price and service. I can’t recall anyone from hhgregg whining about business. Get you act together, Best Buy and quit whining all the time!

Mark Burr
Guest
9 years 8 months ago
It can’t really be said at this point that it could effectively counter Amazon. Who really knows? Amazon is just plain good. They’ve been beaten up, knocked around, failed, tried again, and eventually nailed just about everything they do. Often we forget that they weren’t perfect early on. In fact, they weren’t so good at all. The reality is, however, they have stuck it out and become great. Best Buy on the other hand hasn’t been or would be considered a great retailer by most objective minds today. Not at what they do or even claim to do. That’s not only a problem for maintaining what they currently are but also what they say they are going to do. I’ll follow on to Warren’s boxing analogy with one from baseball. It’s sort of like having your weakest hitter lean into a pitch with the hopes that you get a man on base somehow. The problem is that it hurts when you get it, the lean in becomes timid and it’s seen for what it is… Read more »
Camille P. Schuster, Ph.D.
Guest
9 years 8 months ago

A response to being the showroom for Amazon is necessary but trying to “out-Amazon” Amazon is not the answer. This does not really solve the problem — go to Best Buy to check out the products in person and then go home to purchase at a good price. Providing products by other manufacturers so people have more choices in your online store and creating daily deals does not address the problem.

Anne Bieler
Guest
Anne Bieler
9 years 8 months ago

Best Buy will have to dig deep to execute this as a winning strategy. As a retailer, the customer focus is often mixed, and there are gaps in mix, service and online that are dragging them down. It does note seem realistic to expect Marketplace to drive significant business, unless a better differentiation strategy is implemented.

Alejandro Padron
Guest
Alejandro Padron
9 years 8 months ago

It is a movement in the right direction. But it has to evolve a lot to effectively counter the Amazons of the world.

Mark Price
Guest
Mark Price
9 years 8 months ago
There are several questions raised by Best Buy’s Marketplace concept. One is competitive differentiation, and the other is whether this will address the Amazon Showroom issue. In terms of competitive differentiation, the question is: why does the world need another marketplace? Nothing that I have seen suggests why this marketplace should fill needs unmet by the others. Rather, this looks to be yet another place the consumers “have” to visit. I am not sure that Reward Zone points will be enough to change consumer behavior. The points will appeal to heavy Best Buy purchasers, and perhaps drive some extra share of wallet in that segment, but I see little incremental coming from less frequent Best Buy online customers. Given that this concept seems to primarily appeal to the Best Buy “best customer” segment, it will have limited ability to address the Amazon Marketplace issue, which occurs primarily among the less-loyal BBY customer segments. We will have to see how Best Buy innovates on this concept over time, to appeal to less frequent and less loyal… Read more »
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