For a long time, Best Buy's (NYSE:BBY) biggest advantage became its largest weakness.
The electronics chain operates physical stores. That, in theory, should give it an edge over digital rivals like Amazon (NASDAQ:AMZN) because a brick-and-mortar store allows consumers to see and handle the items they might buy.
The problem -- and it became a very big one for the chain -- is that shoppers would visit its stores, try out various products, then buy them on Amazon. That caused the company issues on multiple levels. Not only did it not get the sale, it also wasted resources essentially making the sale for its rival.
To correct that problem, and save its business, Best Buy had to do a number of things. It matched Amazon's prices, stepped up its Geek Squad service game, and brought big electronics names including Apple, Microsoft, and Samsung into its stores to creates store-within-a-store locations.
Now, with Best Buy no longer in danger of joining Circuit City in bankruptcy and extinction, the company has found a new way to go after its chief rival. It's a move that may help it win back even more sales from Amazon by earning more sales for BestBuy.com and helping the chain make more money from its inventory of open-box items.
Basically Best Buy figured out how to defend its physical turf and now it's aiming at taking on Amazon in the digital realm. That's probably not going to be something that bothers the online sales leader much, but it could help Best Buy continue to build back its business.
What is Best Buy doing?
The electronics chain plans to partner with Lumoid, a website that allows consumers to rent fitness trackers, audio equipment, and other electronics gear before buying it. Consumers will be able to pick a "try before you buy," option on BestBuy.com which will direct them to the Lumoid website. Once they get there, they will have the option to rent the product with an option to buy it if they like it with some of their rental becoming a credit toward purchase.
Best Buy has not officially announced the partnership, but told Recode that it would provide open-box items for Lumoid to rent out. That allows the chain to make more money from items it can't sell for full price because they have been opened and returned.
Lumoid generally does not ask for a deposit (though it reserves the right to in certain cases). The company does however charge consumers for damage that goes beyond normal wear and tear.
Why is this important for Best Buy?
While handling a smart watch or a pricey pair of headphones in a store can tell consumers a lot, it's not the same as actually getting to use them. By partnering with Lumoid Best Buy gives an obscure start-up a larger platform while meeting an actual need for consumers.
Smart watches and other wearables are expensive -- anywhere from $100 to around $500 depending upon what brand and model you buy. Headphones and other audio gear can be similarly pricey.
In the case of both consumers benefit from getting to try them for more than a few minutes in a store. A rental can answer questions about whether you will actually use the device and if it's comfortable and/or fashionable enough for regular use.
This isn't a game changer for Best Buy, but it's another arrow in its quiver. This deal might steer business from Amazon to the brick-and-mortar chain and anything that does that benefits the resurgent electronics retailer.