Best Buy and Amazon join forces
Move suggests you sometimes need to touch things to buy
BELLEVUE, WASH. — Amazon has built its brand as a digital marketplace, but it’s increasingly clear that it also needs a big physical presence to sell the devices that will further knit customers into the Amazon ecosystem.
A deal announced Wednesday that Best Buy will exclusively sell Amazon Fire-edition smart televisions suggests that it can no longer achieve the scale it wants without access to more brick and mortar.
In a rare sit-down meeting with a small group of reporters on Tuesday, Amazon CEO Jeff Bezos made the announcement together with Best Buy CEO Hubert Joly.
This summer, Best Buy will begin selling more than 10 4K and HD Fire TV Edition televisions models from Insignia, Best Buy’s in-house brand, and Toshiba. The TVs will have Amazon Fire TV built in, allowing users to search for and watch broadcast TV, or choose from a catalogue of streaming TV episodes and movies from Netflix, Prime Video, HBO, PlayStation Vue, Hulu and other streaming sites.
The TVs will also include a voice-activated remote with Alexa, Amazon’s voice-enabled assistant, and are set up to pair with any Echo device, allowing users to issue commands to their television via their Echo.
Bezos and Joly made their announcement in a small room designed for demonstrating television sound systems at the back of a Best Buy in Bellevue, Wash.
The Amazon CEO said he was excited by the possibilities because a Fire TV-enabled television gives consumers the convenience and simplicity they want in the increasingly important smart TV segment.
“The data is that it’s growing something like 70 per cent yearover-year, so it’s also a natural place for us to partner together because it’s something customers are very interested in,” Bezos said.
The Fire TV Edition smart TVs will be available exclusively in Best Buy stores and on BestBuy.com. In a first, they will also be sold on Amazon, with Best Buy acting as a third-party seller on the site.
Best Buy and Amazon have a long history that goes back to the Kindle reader. Today, about 700 Best Buy stores feature an Alexa showcase table where shoppers can see how Alexa works, especially with smart home products, said Joly.
“What’s new in this partnership is the depths of the physical integration between the software and the hardware, between the two companies working together — specifically the two companies are retailers, but they’re also product companies,” he said.
Televisions are increasingly moving away from boxes that provide access to content like cable TV or Amazon Prime Video. Instead, that functionality is being built into the television’s operating system and hardware. To be competitive in a shifting market, Amazon needs to get its Fire TV operating system into customers’ living rooms, said Stephen Baker, a vice-president of consumer electronics at the NPD Group. Once the hardware’s in the home, Amazon can use that to get consumers using its smart home offerings and whatever comes next.
The deal shows Amazon understands it’s becoming a hardware company as well as an online company. “And to be a hardware company you’ve got to play nice. Nobody can be successful at the scale Amazon wants to be at just selling their own stuff, you have to go to other partners. This shows they’re recognizing how important that is,” said Baker.
A physical store is more important for new or complex technology that requires an explanation for consumers to really “get” it enough to buy.
“Amazon gets all this credit and buzz about how innovative and disruptive it is, but the fact is that until its acquisition of Whole Foods, it was a single channel operator. True scale is no longer achieved in a single channel,” said Carol Spieckerman, a retail analyst with Spieckerman Retail.
That’s important for Fire TV because it’s an Amazon product that hasn’t always found its way.
“If you go on Amazon.com and you look at reviews of Fire-TV, there are often over 1,000 questions that people ask about connectivity, about compatibility. The Best Buy staff can help smooth those friction points and generate sales,” said Spieckerman.