Amazon-Best Buy partnership marries online, offline tech and data

Amazon Best Buy
Amazon and Best Buy team up to sell new TVs. (Business Wire)

Amazon and Best Buy have teamed up to sell Fire TV Edition smart TVs to customers in both the U.S. and Canada. At the start, Best Buy will will unveil more than 10 new models of 4K and HD Fire TV Edition models from the Toshiba and Insignia brands. 

This move shows the growing importance of both technology and the pairing of online and offline retail, not to mention Amazon's commitment to expanding its technology brand. 

“This deal highlights that even Amazon understands the importance of physical retail stores in driving the adoption of new technology," said Tom Erskine, CMO of One Door.

"Consumers will only adopt 4K TVs, Connected Homes and 5G if they can touch them, and see firsthand how their lives can be made more convenient and fun.” 

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Amazon and Best Buy are aiming to bring the next generation of home viewing to customers, which includes television, home automation and voice control. The new smart TVs will also offer live television programming along with streaming content and can be easily attached to Alexa to search for programs. 

This latest partnership comes not long after rumors swirled of a Best Buy acquisition of Amazon. According to John Mercer, a senior analyst at Coresight Research (formerly Fung Global Retail & Technology), a retail think tank, the move actually places Amazon as an owner of technology brands, rather than as a retailer. And it suggests that Amazon is instead leaving the distribution of its brands up to a trusted and established brick-and-mortar retailer. 

"There are certainly wins for both parties, in terms of exclusive product for Best Buy and distribution for Amazon," Mercer said. "For comparison’s sake, this agreement has echoes of the Kohl's-Amazon partnership, whereby Kohl's started selling Amazon technology products and accepting Amazon returns in some stores."

He does offer the caveats though that Best Buy has already been selling Amazon products for many years and Best Buy will only (for the time being) sell Fire televisions on Amazon's marketplace. 

"Legacy retailers are increasingly looking at opportunities to drive growth. More and more, they are seeking out-of-the-box ideas to ensure they stay relevant to their client base. The Best Buy-Amazon partnership definitely illustrates these trends," said Bahige El-Rayes, principal in the consumer and retail practice of A.T. Kearney, a global strategy and management consulting firm.

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El-Rayes compares the situation to what Alibaba is doing in China. Hema is a brick-and-mortar store in China that now works seamlessly with Alibaba. The average customer makes 4.5 purchases a month on Alibaba sites and conversion for people who open the Hema app is 35% (online accounts for more than half of total orders). 

"For Ali Baba, this [partnership] is all about collecting customer data and using it to serve shoppers with personalized products," El-Rayes said. "Similar dynamics can be implied to this partnership, where Best Buy may be trying to be more relevant to customers, while Amazon continues to collect customer data."

The first models of the Fire TV will hit shelves in the summer with more coming in the fall of 2018. Fire TV Edition smart TVs will only be sold through Best Buy, even as a third-party seller on Amazon. The models will be available in Canada later this year.