Latest news with #Bonfig
Chicago Tribune
12 hours ago
- Business
- Chicago Tribune
Best Buy's website will start selling sports apparel, Martha Stewart wares alongside electronics
People will soon be able to buy Fanatics sportswear and Martha Stewart cookware, along with all kinds of electronics, on the Best Buy website. The retailer announced Tuesday morning it has re-entered the third-party marketplace business. It's a low-risk, high-reward way for Best Buy to better compete with Amazon and other online outlets. And it more than doubles the retailer's product offerings. 'We're looking at the marketplace as a natural extension of the things that we bring to our customers today,' said Jason Bonfig, chief customer, product and fulfillment officer at Best Buy. 'It's a more holistic picture of what our customer would expect and how do we make sure [they] can purchase whatever they would like to at Best Buy.' The new marketplace also broadens the retailer's presence in categories where rivals like Micro Center excel, with a larger selection of laptops, gaming accessories and products from brands such as Razer, Microsoft and Samsung. 'The marketplace is really trying to find the balance of making sure that a customer can get what they want from Best Buy and it expands our assortment, but at the same point in time, not getting that expansion to a point where it becomes very difficult to shop our site,' Bonfig said. Analysts aren't confident about the marketplace's ability to draw in new customers and 'move the needle' significantly. 'Let's say it's furniture. If Best Buy hasn't carried that, then they're not going to be top of mind for someone who's looking for that type of product,' said Anthony Chukumba, managing director at Loop Capital. Best Buy opened its website to select outside sellers from 2011 to 2016, with about 200 sellers participating. However, it ended the program amid low sales and confusion over returns. A refined approach in Canada, launched in 2016, has been more successful: Third-party sellers now account for 25% of orders shipped on according to Jefferies investment bank. A U.S. marketplace, Jefferies said, could account for 14% of Best Buy's online sales by 2030, with commissions boosting profits starting this year. Best Buy declined to comment on when it would expect to see a return in investment. 'It's going take awhile for shoppers to realize Best Buy has the third-party items. So I think it's going take at least a couple of years for this to really ramp up,' Chukumba said. The new U.S. marketplace, same as Best Buy's Canada hub, is powered by Mirakl, an e-commerce software company that has also worked with companies like Kroger, Macy's and L'Oréal. 'Back when we sunset that marketplace, the market was in a very different place. When we look at our customer today, [they] are using marketplaces at a high rate,' Bonfig said. Other retailers from Amazon and Walmart to Target have seen success with outside sellers. Target announced plans in March to increase sales from its third-party marketplace from $1 billion in last year to $5 billion by 2030. CEO Corie Barry previously said Best Buy's U.S. marketplace will focus on new products and offer multiple versions of the same item, meeting customer demand for deeper selection. 'We can see that in customers who are searching our website and looking for a broader selection or looking for a broader quantity of products, and we just don't have them there,' Barry said on a March earnings call. While Amazon operates an open marketplace with minimal entry requirements for sellers, Best Buy, similar to Target, is taking a more curated approach. All potential sellers will be vetted before joining, which Barry previously said ensures 'the positive experience (customers) would expect at Best Buy.' More than 1,500 sellers have been accepted to Best Buy Marketplace, Bonfig said. The initial launch will include over 500 sellers. The retailer's selective approach and substantial array of high-ticket items may help maintain trust with consumers. 'They're experts, curating what kind of products they need to carry and how to put it together into a full-service package,' Hyunjoo Im, retail and consumer studies director at the University of Minnesota, said in a prior statement. 'The price may not be the lowest, but I know for sure that the product is safe.' The marketplace comes at a time when the retailer has dealt with a pickier consumer and a decline in tech upgrades after a boost during the pandemic, resulting in its annual sales declining over the past three years. Best Buy will report its second quarter earnings Aug. 28.
NBC News
2 days ago
- Business
- NBC News
Best Buy launches third-party marketplace as it looks for sales drivers
Best Buy is launching a third-party marketplace, as it tries to bulk up the variety of merchandise it offers and reverse slower sales. Starting on Tuesday, shoppers who go to Best Buy's website and app will see products and brands that weren't available there before, including more tech-related accessories like custom video game controllers and some nontech items including seasonal decor and sports collectibles. The company's online marketplace riffs off those of other retailers, such as Amazon and Walmart, by relying on third-party sellers to stock, sell and ship inventory and taking a cut of their sales in the form of a commission. 'Everything we do is really centered around the customer and their technology needs, and we do see customers actually doing a lot of consumer electronics transactions through marketplaces,' Chief Customer, Product and Fulfillment Officer Jason Bonfig said. 'And as a result of that, we need to make adjustments to be where the customer's at.' He said Best Buy noticed gaps in its assortment that the new platform will help it fill. For instance, Bonfig said the company didn't carry batteries for some older cameras or cases for older smartphones. And it didn't offer some items that complement Best Buy purchases, such as furniture that goes around a big-screen TV or cookware to use with a new kitchen appliance. Along with adding those items, the marketplace makes it possible for smaller vendors with innovative products to sell on Best Buy's website when they're not yet big enough to make or distribute the volume needed for its stores, he added. Best Buy's marketplace launches at a time when its business could use a boost. Its annual sales have declined over the past three years as the company contends with a sluggish housing market, selective consumer spending and a decline in device replacements after a spike in tech purchases during the Covid pandemic. The company cut its sales outlook in May and said it expects full-year revenue to range from $41.1 billion to $41.9 billion. That would be similar to Best Buy's annual revenue of $41.5 billion in the most recent fiscal year, but below the numbers it posted in the years leading up to and during the pandemic. Best Buy will share its most recent earnings results and sales forecast on Aug. 28. Tariffs have complicated the backdrop for Best Buy, too, since the higher duties have added costs for consumer electronics vendors and distracted them from other priorities like research and development that leads to new and innovative products, said Jonathan Matuszewski, a retail analyst at Jefferies. He said Best Buy tends to win sales instead of big-box or online competitors when there's a leap forward in technology. With the platform's launch, Best Buy joins other retailers that have jumped on the trend of introducing or expanding third-party marketplaces. Lowe's and Nordstrom started marketplaces last year. Ulta Beauty plans to launch its own later this year. And Target said it will expand its existing marketplace, Target Plus. On Best Buy's earnings call in May, CEO Corie Barry described the third-party marketplace as one of the company's strategic priorities for the year. She said that new profit stream 'is even more important in this environment' and will provide greater flexibility with the range of items and price points. Plus, she said the marketplace supports the company's growing advertising business. Sellers can buy ads for their products, including by paying for better placement in search results. Marketplaces and the advertising opportunities that come with them tend drive higher profits for retailers, said Justin MacFarlane, a managing director for the global retail group of AlixPartners. Sellers buy, stock and ship products instead of the retailer, and take on both the expense of buying inventory and the risk that they may have to mark down unwanted items, he said. Yet the business model comes with risks, too, he said. For instance, sellers may not have the same standards as a retailer and it could anger a retailer's customers if they send products in torn boxes, with missing pieces or days later than expected. And he said retailers can flood their websites with so many different categories, brands and products that they overwhelm customers with choices that seem irrelevant to their company's identity. 'You get addicted to the growth and more is more until it's not,' he said. At launch, Best Buy's marketplace will have about 500 sellers, Bonfig said. He said the company vetted applicants and whittled them down to the ones who can provide a high-quality customer experience. The sellers must match Best Buy's return policy, he added.
