Inside Best Buy’s new third-party marketplace

This is a significant launch for marketplace sellers as Best Buy has more than 200 million customers, more than 10 billion site views per year and more than 1 million transactions per week, according to company internal data from 2022 to 2023 found on its website. Frank Bedo, chief marketplace and e-commerce officer at Best Buy, told Modern Retail in an interview that the marketplace pairs with the company’s advertising business to create an ecosystem that drives more customers to consider shopping at Best Buy for products they otherwise wouldn’t have.

“It is a tentpole strategy of the enterprise,” Bedo told Modern Retail. “When you look at areas of growth and areas the company is willing and wanting to invest in based on the upside potential, marketplace is one of those areas.”

The marketplace is powered by Mirakl, the same tech platform that has worked with other retailers such as Lowe’s, Macy’s and Ulta Beauty to open up for third-party sellers. Not all have been successful, as Kroger quietly discontinued its Mirakl-powered marketplace and shipping service, Kroger Ship, earlier this year without explanation.

More than 500 online vendors are joining the marketplace, according to Bedo. They include Beach Camera, World Wide Stereo and Antonline.

“The intent of our marketplace is a little more centered around quality of product and seller versus quantity,” Bedo said. “You’re not going to see us expedite the amount of sellers and products. We’ve got a large team dedicated to ensuring that our products and our sellers are a good fit for marketplace, not only to support our customers, but also to complement even some of the 1P products.”

Customers can return products from third-party sellers by shipping them back to the seller or returning them at their local Best Buy store. Store employees can help customers build out a cart on BestBuy.com with marketplace products. Customers will not be able to pick up marketplace items at stores, but Bedo said this is something the company is considering for down the line.

Expanding the lineup

Bedo said that before this marketplace, it would take months for Best Buy to launch new brands, new categories or new products. Now, according to him, the company can do this within weeks.

“We’re incredibly excited about our ability to have a deeper advantage from a speed-to-market standpoint,” he said.

Bedo said that, while tech will remain at Best Buy’s core, the retailer has looked for areas of opportunity where it could gain market share — especially in areas complementary to its core lineup of tech products.

“You’re going to see an assortment that helps provide that value add to the core tech purchase you are making in store and online,” Bedo said. “It allows us to complement all the products and the tech that we sell with a broader range of accessories, … versus what we’ve traditionally been able to support our customers with.”

The marketplace will widen the retailer’s online selection of small appliances and kitchen products from brands including Oster, Crock-Pot, Martha Stewart, Zulay Kitchen and Cuckoo. It will also add more floor-care products from Tineco and Eufy, among others.

By launching the new marketplace, Best Buy’s furniture assortment will be three times larger, with TV stands and office desks, gaming chairs and sofas, coffee tables and barstools, gazebos and pergolas, and patio furniture. Through third-party sellers, Best Buy will offer holiday decor, such as inflatables, trees, throw blankets, ornaments and animatronics.

The marketplace will also add more musical instruments such as guitars and drums, as well as a broader range of toys. In addition, Best Buy will sell Fanatics licensed sports merchandise for the first time.

Through the marketplace, Best Buy will also be able to offer products that would otherwise be out of stock from the retailer by serving up additional color options or variations. For example, it will be able to carry phone cases for older iPhones.

“Now we’ll have the ability to carry legacy products through our marketplace, along with different colors and variations and even [refurbished] excellent products for those who are looking for some more budget-conscious options,” Bedo said.

Balancing 1P and 3P

Like Amazon or Walmart, third-party sellers will appear on the same product pages as items sold on behalf of brands by Best Buy.

Sellers will also be able to buy ads at launch to promote and sell their products. Bedo said the company will also start to weave third-party products into promotional vehicles like Deal of the Day and promotional campaigns like doorbuster events or tech sales at the end of August.

“One of the biggest vehicles we plan to leverage is our promotional posturing throughout the holiday,” Bedo said. “You’ll see 3P products woven in throughout all of our promotional vehicles. Whether it’s Deal of the Day, whether it’s our campaigns, you’ll see 3P products throughout all of that.”

Owen Carr, chief merchandising officer for Spreetail, an e-commerce accelerator for brands and manufacturers of oversized products, said that, if done right, Best Buy could be an important traffic engine for brands in certain categories like electronics, home or appliances. Still, he remains skeptical that items sold by Best Buy won’t overshadow those of marketplace sellers and said he’s waiting cautiously to see whether the company’s own buying team will continue to take priority over the sellers.

“It’s going to take the Best Buy team having to set some of their 1P stuff aside, because they don’t have an infinite amount of traffic,” Carr said. “They only have so much traffic on BestBuy.com, and if they’re going to send some of that traffic to marketplace sellers, that means it will cannibalize some of their 1P business until they can build more traffic.”

Not the first time

Best Buy had previously launched a marketplace in 2011 to compete with Amazon but shut it down in 2016 as it only brought in 1% of Best Buy’s revenue and created confusion among buyers who thought they could return the inventory to Best Buy stores, a Best Buy spokesperson told EcommerceBytes in 2016. Customers will be able to return items from third-party sellers to Best Buy stores this time.

Bedo said marketplace technology is better than it was last time. Plus, Best Buy has learned that customers are more comfortable shopping at marketplaces, and it feels it can now follow the lead of Amazon or eBay.

“When you looked at the technology platform we had, we kind of cobbled together a bunch of different systems to enable our marketplace,” Bedo said. “Now, we will be partnering with Mirakl, which is the backend behind our marketplace platform. They have created the infrastructure and have properly helped us develop the marketplace from the ground up with our teams.”

Mirakl also worked with Best Buy on a Canadian marketplace, which launched in 2016. That’s where the retailer learned how to augment its traditional assortment with a deeper offering, Best Buy CEO Corie Barry said on an earnings call last November.

“I wouldn’t think about this as, all of a sudden, you’re going to come to Best Buy, and there’s this magical huge marketplace that has everything,” Barry said at the time. “This will be a curated, tailored marketplace to the customer that is coming to shop with us and those deeper assortments that you would hope we could provide.”

To determine whether this marketplace will be successful, Bedo said the company will be tracking metrics such as gross merchandise value on the top line, as well as the frequency of customers shopping online and in stores, units per order, and the extent to which customers feel supported when purchasing from third-party sellers.

“The biggest change from 10-15 years ago is that the customer expectations have changed quite substantially,” Bedo said. “The expectation from [customers] is that digital shopping is here, and now and it’s not going anywhere.”