Will Best Buy's New Third-Party Marketplace Counterbalance Its Softening Core Business?

Best Buy is set to take another stab at broadening its sales base and product lineup via the deployment of an online marketplace, as Modern Retail reported.

After having shuttered its marketplace after a five-year stint — it ran from 2011 to 2016 — it seems that Best Buy has a renewed faith in the potential for third-party sellers to avail of its new platform, which is set to open this summer. CEO Corie Barry discussed the expansion of the marketplace into the American market during a November earnings call.

“We have an established, growing third-party online marketplace in Canada, and we are planning to launch one in the U.S. targeting mid next year,” Barry said on the call.

“We believe that as the trusted leader in [consumer electronics] we have an opportunity to leverage our positioning and assets to build a differentiated digital marketplace platform, thereby bringing our customers access to a much more expansive assortment and new categories. In addition, sellers and advertisers will have an additional avenue to increase their reach and build their brands leveraging our qualified traffic," Barry added.

Best Buy Sees Sales Slump After Pandemic High

According to Modern Retail, during its most recent earnings call in November 2024, Best Buy reported a 3% dip in sales figures — and sales have been falling for a few years now. Shouldering the blame is a persistent softness in the brand's core business, particularly surrounding appliances, home theater, and gaming categories.

Best Buy's previous marketplace gambit was a bit of a mess as well. The effort accounted for just 1% of the company's total revenue, and customers were confused over the distinction between purchases made through Best Buy itself versus those made on its marketplace, fulfilled by third-party vendors.

Whether or not Best Buy's gamble will pay off this time remains to be seen, but analysts appear to be bullish on the prospects.

“The traffic is very high, and the consumer base is very loyal — it has a lot to do with that brand that Best Buy has built,” said Megan Potts, founder of Triforce Digital Partners.

“I think that Best Buy is going to add a lot of unique millennial eyeballs that are already shopping there; these are really affluent customers, much more affluent than Target and Walmart, even Amazon," she added.

Best Buy's marketplace will be powered by Mirakl, a software company that already provides a similar service for other notable retailers such as Macy's and Nordstrom.

“A new marketplace is coming to town — Best Buy,” Adrien Nussenbaum, Mirakl founder and co-CEO, wrote on LinkedIn. “This is a game changer for U.S. online commerce. Excited to see the future launch and support Frank Bedo and his team with the full Mirakl force.”

Best Buy CEO Promises a 'Curated, Tailored Marketplace'

Barry elaborated on the company's plan regarding its upcoming marketplace, stating that drawing from Best Buy's Canadian marketplace experience would be vital for the American version's success.

Indicating that it was nigh-impossible to provide every accessory — using the example of smartphone cases — to every potential customer in a brick-and-mortar operation, Barry pivoted to the online marketplace as a timely and convenient customer solution in this regard.

“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. “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 you could provide.”

Potts is optimistic about Best Buy's chances as it enters an already crowded space, one where Amazon, Target, and others have already carved out territory for themselves. Where Best Buy's marketplace is smaller and a new entrant to the space, third-party vendors could score some excellent opportunities regarding placement.

"Best Buy is going to be another one now where they can get these really high real estate placements — where you can’t talk to anybody at Amazon unless you are a top-five seller,” Potts said. “A homepage placement on Target [over Thanksgiving week, Black Friday and Cyber Monday] could give you $300,000 to $500,000 a day, which is very, very valuable to those brands."