Over the past year, Best Buy has increased its focus on delivering value to consumers, while striving to stay competitive in a volatile market.
As part of its “Renew Blue” initiative, the electronics retailer has honed in on several key initiatives: Reinvigorating and rejuvenating the customer experience; attracting leaders and employees; working with vendor partners to innovate and drive value; and continuing a leadership role in positively impacting the world.
The Secondary Markets Division of Best Buy has experienced a surge in sales and satisfaction since partnering with MarketYze, a pricing intelligence software company, to keep a constant pulse on the electronics landscape. Through a number of sales channels, including CowBoom, the Best Buy Secondary Markets Division refurbishes and resells products that were traded in, returned, or overstocked in stores.
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A key goal for the division is to “keep these products out of landfills and give them a second chance for use,” said Robert Biles, General Manager – Online Consumer Sales, Secondary Markets, Best Buy. “This has actually worked out very well for us over the past couple of years.
Best Buy has worked with MarketYze for approximately two years to ensure products that are being resold are priced competitively.
Since partnering with MarketYze, Secondary Markets has seen “some pretty good results,” said Biles in an interview with Retail TouchPoints, especially in light of the variety of challenges the secondhand electronics market. “The bulk of items are gently used; they have open boxes or the customer got it from the factory and brought it back to us. You can’t sell it as new, so you try to sell it one step down. Some products have lived with a customer for anywhere from 30 days to a year.”
The Secondary Markets Division of Best Buy refers to data pulled from the MarketYze platform to benchmark pricing trends from a variety of competitors and sources, including Craig’s List and eBay.
“We’re leveraging a view of the entire competitive landscape,” Biles explained. “One of the things that MarketYze can do for us is take that data, which is very far reaching and can be a bit inconsistent, boil it down to make it easy to base our pricing algorithm off of.”
A Mix Of Art And Science
Pricing used electronics can be challenging because there are not always clear benchmarks. Certain item may be older or have a unique condition, Biles noted. “That’s been a big benefit from the work we’ve been doing with MarketYze. We’re able to make some sense out of some products that don’t necessarily have a direct correlation with another product or price. If you look at Craig’s List or even eBay to a certain extent, there are hundreds of different product conditions and SKUs.”
MarketYze empowers the Secondary Markets Division of Best Buy to deliver on its promise of providing quality, affordable products to consumers. “Not all customers can afford a $600 iPad, but a large percentage can afford a $100 iPad, which is the focus of our division; being able to get those products priced competitively for the condition their in, and getting those products in customers’ hands.”
Because the electronics business can be highly commoditized, a penny’s difference in pricing can have a significant impact on sales, according to Biles. However, retailers always need to walk a fine line between providing compelling and competitive pricing while also protecting profit margins.
With MarketYze, the Best Buy Secondary Markets Division can spend “less time tinkering over what the most competitive price is,” Biles said. “MarketYze allows us to be more automated and up-to-the-minute, but also dig in more and make sure we’re protecting margins. It has helped us build a more profitable business that also delivers more value to the customer.”
Biles explained that if retailers only refer to historical data, “you’re always going to be a step behind.” Retailers need to consider “where the market is today, where it’s going and then frame a model around those key points. Pricing something at $99.99 versus $101.99 requires a mix of art and science.”
Moving forward, Biles expects that the used product market will continue to grow and become more mainstream. To test this hypothesis, the Best Buy Secondary Markets Division asked consumers via social media if they’ve ever given a used product as a gift.
“Within five days we had 1,000 responses and the overwhelming majority had these heart-wrenching stories of how this customer couldn’t afford the new game console their kid really wanted and we had basically saved Christmas,” Biles said. “They were able to get the product and they were so happy. It’s an interesting space and I think it’ll continue to grow especially as more companies embrace upcycling products and getting them out of landfills.”
