Amazon's Top-Selling Television Comes Via Its Frenemy Best Buy
(Bloomberg) -- Amazon.com Inc.’s shadow looms large over most U.S. retailers this holiday season, but the online giant could prove to be bright spot for Best Buy Co.
Two of the top five best-selling televisions on Amazon as of Dec. 17 are models sold on Best Buy’s new storefront on Amazon, which the companies unveiled over the summer. The TVs come equipped with Amazon’s Fire smart-TV platform, which can link with the company’s Echo devices for voice-activated channel surfing and streaming. The two Fire TVs, one made by Toshiba and the other from Best Buy house brand Insignia, are also available in Best Buy stores and on its website.
“TVs sold by Best Buy have grown to dominate the television category on Amazon,” said Joe Kaziukenas, founder of researcher Marketplace Pulse.
Best Buy’s relationship with Amazon is one of the more unusual pairings in retail, fraught with opportunity and peril for Best Buy, the nation’s biggest consumer-electronics retailer. It has sold Amazon’s Kindle e-reader for years, and more recently it has carved out dedicated space in its stores for Amazon to sell Echo devices and related smart-home gadgets. The TV deal gives Best Buy access to Amazon’s massive online customer base, while Amazon gains a brick-and-mortar presence and additional products that can attach to its Alexa home assistant, which competes against similar devices from Google and Apple.
“It’s definitely sleeping with the enemy, but more power to them,” says Aaron Cheris, head of the Americas retail practice at consulting firm Bain & Co.
Best Buy could use some good news to assuage investor concerns that its holiday performance may disappoint. The shares fell as much as 6 percent Monday after Bank of America Merrill Lynch slapped them with the equivalent of a sell rating, the bank’s second downgrade in as many months. Analyst Curtis Nagle said Best Buy could miss fourth-quarter sales estimates due to recent sluggishness in key categories like televisions, which comprise about 25 percent of Best Buy’s sales, he estimates.
Best Buy Chief Executive Officer Hubert Joly often downplays the Amazon relationship, saying that together, the two companies only control one-quarter of the U.S. consumer-electronics market, so “there is a lot of room for both of us.” Asked specifically about the performance of Best Buy’s Amazon storefront during an interview last month, Joly demurred, saying there was “nothing you can write about.”
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