Best Buy has long been one of my favorites as a retailer who has done an excellent job of developing its brand and growing its market share in the competitive electronics market. It has maintained its #1 share of the category and has out –performed the other electronics merchandisers consistently. I’ve commented on how Costco, Sam’s, and Walmart have really made an impact on the category but it wasn’t until I read an article recently by John Kelly in the Wall Street Journal about how Amazon was really becoming a factor in the category to the point that Best Buy had better watch its back as the company continues to grow.
As its shares have tumbled, Best Buy should note how Amazon has expanded its brand to compete favorably with big box retailers. Certainly, Amazon is a brand synonymous with online book sales. It’s Kindle e-book reader has set the standard for digital reading and now it has taken that lead to expand its sales in electronics and non-media to $18 Billion last year (up 66%). While the brick and mortar retailers continue to fight the price wars and promotions, Amazon has become the resource for information that over 88% of shoppers in this category seek online before they go to the store.
So, how has Amazon built their business beyond the original core strength as a bookseller? It all has to do with branding. Sure, Amazon has been a pioneer in online marketing but it’s what they’ve done for their customers and prospects that have established a brand that is consumer friendly and builds loyalty not simply by making it easy to find what you want, but by understanding their customers, recognizing their shopping preferences and rewarding them for their loyalty by making it easier to buy and offering targeted suggestions to build the incremental sales at the same time. The company has build its brand on a solid platform and has translated its reputation and trust to other categories from toys to flat-screens to fashion pumps. Using its ability to recommend items based on what you purchased as well as what you only considered makes this a highly personal brand that has built a relationship with its customers every time they click on the website.
Compare any page and any category on Amazon with a page in the sale circulars for Best Buy, Kohls, or Macy’s and you see a consistency of message and quality that is only surpassed by the consistency of the purchase transaction. It’s this kind of quality that builds relationships and enhances a brand that endures with its customers.
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