Popular online retailer Amazon’s ascent over the years created a new template for the retail industry at large. While Jeff Bezos’s company did not invent online shopping, it certainly popularized it on a global scale.
Best Buy, Walmart, and a host of other traditional big-box retailers are now taking a page from Amazon’s playbook by adopting a third-party-seller business model in hopes of keeping up with a turbulent retail landscape. This is perhaps a last-ditch attempt by some retailers to survive the economy. Best Buy in particular has struggled in recent months, and those financial issues have culminated in the closure of several stores. This is not the end for the electronics retailer; however, the company is in the midst of making strategic restructuring decisions to remain afloat.
Introducing a marketplace-style model appears to be the company’s latest approach to coping with the seemingly endless retail apocalypse.
Best Buy changes strategies
The electronics giant recently revealed plans to launch a U.S.-based marketplace later in the year. The news was announced by CEO Corie Barry on the company’s most recent earnings call on March 4. Barry also shared that “the move aims to expand the company’s profitability stream opportunities.”
This new marketplace system aims to allow third-party sellers to list their inventory on the Best Buy platform. Barry further explained that the idea behind this operational innovation is to offer a broader assortment “without needing to own the inventory.”
Best Buy is not alone in adopting this approach, which was initially popularized by Amazon. Supermarket giant Walmart has also followed in the footsteps of Bezos’s strategy, and now the electronics giant is here to compete as well.
At its core, this model allows third-party sellers to drive more traffic to the site. Additionally, a marketplace mode of operation creates valuable advertising revenue.
According to Barry, this is a key step aimed at the company’s growth. The brand’s trusted position in consumer electronics will enable it to build a “competitive and differentiated” marketplace atop its already strong foundation. As such, the new platform will allow customers to choose from a broader selection of products, along with an expanded range of categories.
What led to this decision?
The retailer’s operations in Canada already have a similar marketplace up and running since 2016, meaning this move by Best Buy is not entirely a mirror of Amazon’s model.
The U.S. iteration of the marketplace will differ slightly from its Canadian counterpart. For Canadian shoppers, items purchased through the marketplace must be returned by mail if needed. In the U.S., however, shoppers will have the option to return marketplace purchases at their nearest physical store.
Additionally, the U.S. marketplace will be supported by Mirakl, the tech company behind the retailer’s Canadian marketplace.
Like its peers, the retailer is also warning customers about the impact that impending tariff increases will have on overall pricing. Despite this, the company remains confident in moving forward with the launch. Best Buy imports 2% to 3% of its goods directly; however, it is inevitable that higher costs will be passed to retailers by vendors, which will ultimately affect consumers—specifically, their wallets.
Regarding the tariff hikes, Barry said the increase makes “price hikes for American consumers highly likely.”
“At the end of the day, consumers will see impacts across many of the things they’re buying,” Barry added.