Amazon.com, Inc. (NASDAQ:AMZN) and Best Buy Co Inc (NYSE:BBY) are fierce competitors. However, the two rivals just announced a historic partnership designed to leverage “showrooming” to their mutual benefit. Best Buy will begin carrying a new Amazon Fire Edition TV lineup in its stores, with Amazon Fire and Alexa integration. In addition, Best Buy will sell the smart TVs on amazon.com, as a third-party seller.
BBY stock was up 3.6% on the news.
Amazon and Best Announce Partnership on Amazon Fire Edition TV
It wasn’t that long ago that show rooming was a huge threat to Best Buy. Customers were coming into its stores to get hands-on experience with products — especially big and expensive consumer electronics like TVs — then turning around and ordering them from Amazon.
Now the two rivals have announced a partnership that will leverage that show rooming, with both parties expected to benefit. Starting this summer, Best Buy stores will begin exclusively carrying Amazon Fire Edition TVs. These smart TVs come pre-loaded with Amazon’s Fire smart TV operating system, and feature Alexa voice support. Showing how deep the partnership runs, Best Buy’s own Insignia brand of smart TV will carry the Amazon Fire Edition TV label.
The new Amazon Fire Edition TVs will also be available on Best Buy’s website. And, Best Buy will be selling them on amazon.com as a third-party seller.
In a press release, Amazon CEO Jeff Bezos had this to say, making the two companies sound like old friends:
“Amazon and Best Buy have a long history of working together, and today we take our partnership to a new level. These Fire Edition smart TVs by Insignia and Toshiba deliver beautiful visuals and all the movies and TV shows you love, with an experience that gets better every day with Alexa. We could not have a better partner in this endeavor.”
Extending an Unlikely Partnership
While definitely rivals, the Best Buy and Amazon relationship has quietly thawed over the years. For example, you may not realize it, but Best Buy actually carries Amazon Echo smart speakers.
This relationship — and the partnership that has resulted in the Amazon Fire Edition TV — is a result of both companies accepting some realities. Best Buy realized that consumers want these Amazon consumer electronics. And Amazon’s weak spot has always been a lack of physical locations where consumers can walk in, see, touch and instantly buy its products.
That problem was in the spotlight earlier this year when Wal-mart Stores Inc (NYSE:WMT) announced it would prominently carry Kobo e-readers in stores, giving the Kindle competitor a significant boost.
Having Amazon Fire Edition TVs at Best Buy means Amazon gets its smart TV platform into physical stores. That eliminates a big problem (literally big, given the physical size of TVs) of how to impress consumers with features they would otherwise only see online, and should boost sales. That would increase the Fire TV market share among smart TV platforms, and gets Alexa into even more homes. Best Buy — the exclusive retail partner — gets more people in stores looking for Amazon electronics and gets a cut of any sales through its channels. Win-win.
The biggest loser out of this arrangement appears to be Roku Inc (NASDAQ:ROKU). The set-top streamer maker provided the software that powered Best Buy’s Insignia smart TVs, helping to expand its market beyond the standalone boxes. On news of the Amazon Fire Edition TVs, Roku Stock dropped nearly 12%.
Look for Amazon Fire Edition TVs to begin appearing at your local Best Buy store this summer. They will arrive in Canadian Best Buys later this year.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. He is a paid contributor to Best Buy Canada’s blog.