Best Buy Should Buy Consumer Electronic Startups
iamvictorio.us
Best Buy Should Buy Consumer Electronic Startups
1–10 of 32 posts
Re: Best Buy Should Buy Consumer Electronic Startups
#2Yeah, just what start ups need to succeed; Best Buy. I've always wanted to see start ups offering "Performance Service Plans" on their product.
Re: Best Buy Should Buy Consumer Electronic Startups
#3Or maybe there's a market for independent electronics stores to sell independent gadgets.
Re: Best Buy Should Buy Consumer Electronic Startups
#4Not exactly my field, but my understanding is that large retailers sometimes do do outsourced product development roughly similar to this post's suggestion. Typically, that is a result of someone in direct sales building a monstrously successful product (relative to other direct sales items), then using that as leverage to get the chain to stock it on terms which are more favorable than their usual ones. (Consumer electronics manufacturing is a tough market, kiddos, and the folks who control the distribution channels very aggressively remind you that if you don't give them very favorable terms and also pay them for pushing your product then they will find someone who will.)
If you've got something which is profitable in direct sales but is not yet a monstrous brand name, it doesn't make sense for you to sell to Best Buy (why serve in heaven when you can reign in... wait, this doesn't work if heaven is Best Buy) and it doesn't make sense for Best Buy to buy you, because you're probably selling something that a Chinese factory can produce in a functionally equivalent fashion for 1/3rd the price.
The asset is the brand/proven distribution channel. (That's why e.g. Magic Bullet survives when you can get functionally equivalent food processors for less literally adjacent to it in the store. The functional equivalents have higher margins and would have displaced the Bullet but for the Bullet being the customer favorite due to, well, really good infomercials.) Best Buy doesn't really want to buy that from you, because you'll peg the price to the existing distribution channel that you own which they have no desire in.
Re: Best Buy Should Buy Consumer Electronic Startups
#5Off topic,
The example given of an appliance that cooks food in a sealed bag in a water bath called sous-vide [1] is interesting. I heard about this technique from a coworker for camping and cooking omelets, where there is no cleanup and everyone can make the omlet how they want. I had no idea this was a legitimate cooking technique - cool, now I know what it is called.
Re: Best Buy Should Buy Consumer Electronic Startups
#6Seems me that Best Buy would be better served by reinventing itself as an incubator of/investor in these products and selling them on Amazon.
Nothing is going to save the dead model of service contract bullying and cavernous stores where everything costs 50% more than it does (or would) on Amazon.
In any case, I'd be very surprised if Best Buy has the guts to do anything radical.
Re: Best Buy Should Buy Consumer Electronic Startups
#7This is a high-risk strategy, and I think it would be very cool. Unfortunately, Best Buy culture basically eschews risk. Being successful in that company mostly involves not doing anything that will get you noticed in a negative way, and eventually you'll get promoted. The entire company has become all about squeezing out profits on commodities at ever-shrinking margins - and we've seen how well that is going. Everyone there felt pretty smug when they were wiping the floor with Circuit City, but now they are being pwned by Amazon. I just see too much inertia to turn that ship around. If Schulze can take the company private again, then maybe they can recover, but mostly I think they are doomed.
Re: Best Buy Should Buy Consumer Electronic Startups
#8What self-respecting Consumer Electronic Startup would sell themselves to Best Buy?
Re: Best Buy Should Buy Consumer Electronic Startups
#9It would more often make sense for a consumer electronics manufacturer, not a retailer, to buy a startup. The manufacturer can sell in a variety of channels, whereas the retailer can sell only in their channel (most of the time). The manufacturer has lower margins (because the retailer will take their cut), but I'm willing to bet that they more than make up for it on volume.
So it seems like a CE manufacturer will always outbid a Best Buy for a startup.
I think this is why you don't see Best Buy or other retailers buying CE startups. The only ones available to them would be the ones that CE manufacturers aren't buying and you'd have to ask yourself why they wouldn't buy them.
Re: Best Buy Should Buy Consumer Electronic Startups
#10I thought this post was absolutely brilliant. It's completely outside of Best Buy's current corporate culture, but perhaps they understand that experimentation is greatly needed.
I envision a specific, labeled section within Best Buy stores that is titled something along the lines of, "Best Buy Labs". It would contain non-UPC products of quality and would attract attention almost purely out of consumer curiousity. ("I wonder what they have in there this week?") The contents of the section would vary slightly from region to region, perhaps to play up local goodwill. Returns and exchanges would pose a challenge, but I see significant upside.
Edit: I forgot to add that it would be critical to keep this section clear of infomercial style gimmick products. If the perception turned from this being a laboratory to a Real TV store the idea would be sunk.