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The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.

Thu Sept 8 2011 10:02:09

Best Buy Opens Marketplace to Third-Party Sellers

By: Ina Steiner

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Yet another chain-store retailer has launched a marketplace open to third-party sellers - this time, Best Buy. Sears and Walmart.com also allow third-party sellers to list on their sites. Retailers are looking for ways to monetize traffic to their websites, though the verdict is still out on how successful traditional retailers have been in opening up their sites to third-party sellers.

Five of Best Buy's suppliers represent 39% of total merchandise it purchases - Apple, Samsung, Sony, Hewlett-Packard and Toshiba. And Best Buy's 20 largest suppliers account for just under 65% of the merchandise it purchased in 2011. With its new Marketplaces, Best Buy said it would be able to add one-third more products to its offerings.

The company also operates a global sourcing office in China in order to design, develop, test and contract manufacture its own line of exclusive brand products from factories in Asia.

Best Buy was clear to say in its announcement that third-party sellers would not be offering products that compete with its own catalog, so that "consumers won't have to spend time sorting through redundant products or comparing prices from multiple websites."

Best Buy indicated it would be picky in choosing "trusted" partners, saying it would evaluate new sellers against a set of standards including their tenure in business, overall customer satisfaction, order cancellation history and back-order history.

Third-party sellers have embraced the multi-channel approach in an effort to increase sales. It's a complex task, and sellers use inventory-management tools to help them get on many marketplaces and comparison shopping engines, and they use repricing software to optimize pricing across multiple channels.

One of Best Buy's new sellers is also a third-party marketplace itself. Buy.com, which sells on marketplaces such as eBay, has its own website where it allows third-party sellers to list items alongside its own drop-ship catalog.

Best Buy said it would differentiate listings from third-party sellers from its own inventory:

"Items fulfilled by Best Buy Marketplace sellers are clearly noted and customers purchasing from BestBuy.com will still enjoy a seamless shopping experience, maintaining the same single shopping cart and simplified checkout process. The Best Buy Marketplace seller handles shipment and returns, but Best Buy Marketplace also offers a Marketplace Guarantee to ensure customer satisfaction with every purchase experience."

Items purchased from Marketplace sellers will also earn Best Buy Reward Zone points for buyers, though items from third-party sellers will not be available for in-store pickup.

Retailers like Best Buy are looking for ways to grow their ecommerce initiatives. Borders' bankruptcy is evidence that big box chains need to grow online sales and take a hard look at their store operations.

Best Buy plans to open approximately 150 Best Buy Mobile small-format stand-alone stores in the U.S. in fiscal 2012. It operated 177 Best Buy Mobile Stores in the U.S. at the end of fiscal 2011, up 139% from 2010, and up 366% from two years ago. In contrast, it grew its big-box stores 2.8% to 1,099 Best Buy stores in the U.S. in 2011.

Comments (9) | Permalink

Readers Comments

Best Buy Opens Marketplace to Third-Party Sellers

by: Ron

Thu Sep 8 10:56:13 2011

Well, here we go - the floodgates are opening.

This is the competitive position that Donahoe put eBay in. Compete against the whole world without the competitive edge of lower pricing.

Whereas eBay had a well entrenched competitive position with the second-hand auction market, they tossed that away in order to pursue an Amazon-like strategy, except without the Amazon advantages.

They could have had both their traditional auction based website as well as a new fixed price site, but management was too clueless to understand what they already had. No, they had to "change before we're forced to change" with a program of "disruptive innovation".

eBay marketplace growth has been laggard?
Just wait until there are more entrants offering fixed price new goods.

Best Buy Opens Marketplace to Third-Party Sellers

by: Charlie W.

Thu Sep 8 13:41:07 2011

Ron nails it!!

It's clear now that eBay lacked the understanding, ability, or vision to be able to compete in the same arena as Amazon. In spite of those shortcomings, they probably would have had a better chance at success if, as you pointed out, they had split the auction-site from the fixed-price site.

Hindsight is 20/20, especially from the Seller's perspective. I wonder if it's too late for eBay to try and re-group and pursue the path that should have been taken long ago.

If so, will the auction Sellers that were cast by the wayside still be there... or will they be willing (or trusting enough) to try again.

Best Buy Opens Marketplace to Third-Party Sellers

by: Rich(y)

Thu Sep 8 14:29:23 2011

Let me guess: as a sad concession to ONSIE sellers they will offer an "everything else category." More splitting up of the fixed-price new/imported pie.

Best Buy Opens Marketplace to Third-Party Sellers

by: John

Thu Sep 8 16:23:43 2011

The Internets answer to the postal problem of Junk Mail.

Best Buy Opens Marketplace to Third-Party Sellers

by: Ed Gadfly

Thu Sep 8 19:19:56 2011

Best Buy had the goons stopping every one at the door to search their bags and recheck their receipts at the exit - because they didn't trust their workers or customers.

I'll do business elsewhere, thank you.

Best Buy Opens Marketplace to Third-Party Sellers

by: Less than Best

Thu Sep 8 23:51:07 2011

I can't stand Best Buy. If there are any issues whatsoever with a purchase, the customer service is the worst. Even a simple task of exchanging a defected DVD with another turns into a long time consuming ordeal. If you do make a purchase, just better hope you have no problems.

Best Buy Opens Marketplace to Third-Party Sellers

by: The big price slam down.

Sat Sep 10 16:49:11 2011

''The company also operates a global sourcing office in China in order to design, develop, test and contract manufacture its own line of exclusive brand products from factories in Asia.''

They are cutting their own throats. In time, what will any one of these retailers have to offer in a competitive product but lower prices.
Then even lower prices.
Then the next big thing, lower prices.

How exclusive will the products be when the Chinese produce the retailers products in the day for America, then at night when no one is looking they will produce the same products and sell them under another label.

Best Buy Opens Marketplace to Third-Party Sellers

by: another side of the coin

Sat Sep 10 17:54:42 2011

Just keep in mind as the price drops so does the quality. The quality of most Chinese items are pretty poor to begin with both online and in stores. Safety being the main concern with electronics.

Best Buy Opens Marketplace to Third-Party Sellers

by: buck efay

Wed Sep 14 20:37:42 2011

Yeah, Global sourcing in China worked so well it's part of why Circuit City went under. Anybody remember Nexxtech? CDrs for $5 a 100? That you could see thru with a 30-40% failure rate? Or their CD recorders that never booted up? As said above, a race to the bottom, and the buyer suffers. My 25-40 year old US/Japan made stereo amps & cassette decks, VCRS & Laserdisc players all work perfectly, but I've trashed at least 5 DVD players, 4 cd recorders & 2 DVd recorders, all Chinese dreck. At one point, I was returning a dvd player every month to Target until I gave up.

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