Thursday, February 26, 2009

Best Buy is Getting into the Secondary Market

According to a blog post by Best Buy CMO Barry Judge;
"We have a new team at Best Buy called the Secondary Market Team. Most people don’t have a clear idea of our vision in this area or what the team is doing. This is a team that gets me very excited about the future at Best Buy, let me tell you why.

Secondary markets refers to all the buying and selling involved in “non fresh” product. Things like vendor overstock, consumer returns, refurbished, used, etc. that are often sold through alternative channels like auction sites, clearance centers, overstock stores, etc. You might be shocked to learn that secondary market electronics sales represent an estimated $15B market in the United State. This is a space where Best Buy has only just touched the surface of all the opportunity. Getting our “fair share” of sales in this market is easily a $1B revenue opportunity for us."
What this ultimately means to the secondary market is unclear as Best Buy is in the planning stages, but it is clear that more retailers will be thinking along these lines. 

Could Best Buy eventually open a marketplace of their own? Judge hinted about that;
"Now that we have the ability to receive, process, and re-sell products in these markets, it opens up opportunities for new business models which were not previously feasible. Things like extended product support or “trade in to trade up” privileges may become viable because we have the ability to extract the value from secondary market products through alternative channels."
Just my 15%

5 comments:

tekgems said...

If you can buy used stuff locally and it comes with a warranty, that reduces a lot of the risk of buying online. Especially on more expensive or heavy electronics, shipping is a big expense. Buyers can redirect that cost into warranty. I think getting into overstock is great, but refurbished and used is a big mine field. Its a bit risky but if they manage that carefully with high quality control standards, they could succeed with those type of products as well.

Ebaycan vai toma cu said...

stories like this tell me that little by little, the internet as a whole will devour ebay

Randy Smythe said...

Tekgems,

I think you are correct that used and refurbished is a minefield and problems in those areas would negatively affect best Buy's brand.

I do think that certified used and refurbished with 30-day warranty would get around that.

toby said...

In Canada Best buy (with their Future shop brand) has entered the used video game market. They made a big announcement last summer how they were going to take on Gamestop...but so far it doesn't seem to have taken off to a great extent. It has resulted in some trade in price war promotions between the 2 of them and blockbuster, which has probably put some product that would have been C2C on ebay etc into retailers inventory. With the increased fees/postage cost it often doesn't make any sense for a consumer just looking to swap product to use ebay anymore compared to the spread the stores are operating with.

They do things a little differently, all the games they take in in trade are sent back to a central location for refurbishment then redistributed to the stores.

They always have had lots of refrubished from manufacturer products.

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