Best Buy in an Amazon World


Best Buy has been notoriously resilient in the age of Amazon. As other traditional retailers struggle, Best Buy has surprised the public by exceeding financial expectations. And most recently, Best Buy has made a splash in the news by partnering with Amazon: Best Buy shoppers can now try out and purchase Echo products, Kindles, and most recently, Fire TVs, in-store.

How Best Buy thrives in a post-Amazon world

Journalist Kevin Roose interviewed Hubert Joly, Best Buy’s chief executive, in an article for The New York Times in order to pinpoint exactly how the retailer got their head above water. The interview revealed five main strategies:

  1. Price matching Amazon. While it may have hurt financially, offering the same low prices as Amazon was the first step to retaining customers and not acting simply as a showroom.
  2. A more human approach. Joly realized that in order to beat technology, he had to implement “things that robots can’t do well — namely, customer service.”
  3. “Showcase and ship.” Best Buy now partners with and showcases products from big tech brands (Samsung, Apple, Microsoft) in their stores. This strategy takes some pressure of making in-store sales — the retailer gets paid for showcasing products either way. This is commonly believed to be Best Buy’s most effective strategy.
  4. Cut costs. By removing inefficiencies and pinpointing problems, like “an unusually high number of flat-screen TVs being dropped in its warehouses,” Best Buy could save money.
  5. “Get lucky, stay humble and don’t tempt fate.” Basically, by being optimistic, Best Buy has a better chance at success.


Amazon as a partner

Best Buy’s decision to partner with Amazon fits right into their proven “showcase” model — but there’s more to it than that. With the most recent announcement, Best Buy will be selling about a dozen models of Amazon Fire TVs starting this summer, including TVs made by Insignia, a brand owned by Best Buy. Additionally, Best Buy is becoming a third-party seller on Amazon where it will be the exclusive seller of these Fire TVs.

But Amazon’s presence is not only in-store — Best Buy’s website currently promotes Amazon products and encourages the viewer to “check out the in-store Amazon Alexa experience.”

Amazon has recognized the desire for some customers to test out products before purchasing them, and their partnership with Best Buy can be seen as a vehicle to accomplish this task — similar to their investments in Amazon Books and Whole Foods. For Best Buy, the partnership is two-fold: more showrooming means less in-store sales are needed to be profitable, while selling exclusive product both in-store and on Amazon may result in piqued interest from consumers.

This article is part of a series of daily posts called Quick Bites.