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Amazon and Best Buy team up to sell TVs, but it’s a risky move for Best Buy
Amazon and Best Buy today announced a partnership that will see Best Buy selling smart TVs running Amazon's Fire TV software and Alexa in its physical stores. The deal will begin with "more than 11" models of Insignia and Toshiba TVs going on sale at Best Buys this summer.
TVs are a challenge for Amazon, as consumers might be disinclined to buy a TV sight unseen. You can't judge comparative quality from images on your computer monitor. Some things, like HDR, are not possible to experience at all without being physically present in most cases. So Amazon needs a popular retail outlet for its TVs to make progress in that market. Best Buy dedicates much of its stores' square footage to showcasing TVs, though the lighting conditions are only suitable for assessing quality in the specialized rooms reserved for the highest-end sets.
When Amazon acquired Whole Foods, industry analysts suggested several options for other retailers that Amazon could benefit from acquiring, and Best Buy has come up in that context a few times. However, Best Buy's partnership with Amazon indicates that Amazon doesn't need to make an acquisition to reach consumers who need to see a TV in person before buying it.
While the companies' public announcements only specified that Amazon Fire TV Edition TVs would be sold in Best Buy stores, a Wall Street Journal report claims that the deal reaches further, with Best Buy selling the TVs on its online store and acting as the exclusive merchant of the TVs on Amazon's own website. This will be the first time Best Buy sells products on Amazon.
Notably, this announcement also implies that Insignia TVs (Best Buy's house brand) may drop software from Roku in favor of Amazon's, though Roku TVs from other manufacturers will surely still be sold.
The announcement from both companies is so aggressively framed to play down past rivalries that it almost looks like the companies are protesting another narrative. Even the joint press release is written to emphasize mutual praise and admiration between the companies. "Amazon partners with Best Buy because of its industry-leading role in bringing the latest technology to millions of customers," says one header. "Best Buy chooses Amazon Fire TV Edition for its innovative user experience combined with the intelligence of Alexa," says the other.
Recode called the two companies "frenemies." That's apt.
Best Buy has survived Amazon's pressure on retail outlets partly by building out its own online commerce efforts. Working closely with Amazon could threaten that progress. Further, Best Buy is forfeiting one of its chief competitive advantages—that consumers can examine products in person before purchasing them—albeit in a limited scope.
