Best Buy’s Trade-In Plans: “Why Let eBay Have All The Fun?”

Written by Evan Schuman
March 4th, 2010

With the economy putting intense pressure on supplier costs—while also making lower cost merchandise highly attractive—Best Buy is quietly making a push into the secondary market, a strategy that is opening huge possibilities in its CRM analytics. Suddenly, a sold product starts the clock on when it can be profitably bought back.

“The product now doesn’t disappear from your mind after it’s sold. It actually just begins a different lifecycle,” said Larissa Hall, the Best Buy general manager in charge of the consumer end of Best Buy’s new venture. “Why let eBay have all the fun? You don’t throw away a car when you’re done with it. Even a broken DVD player is worth something.”

Hall’s operation is called Cow Boom, which Best Buy obtained through its late 2008 acquisition of DealTree. Hall said she expects Cow Boom to have about 100 employees, when it’s done ramping up. Today, the unit has fewer than 30 dedicated employees, she said.

Best Buy is far from alone among major retailers exploring this space, with Amazon having recently started making official overtures. But Best Buy has some theoretical advantages over the E-Commerce giant.

First of all, there are more than 4,000 Best Buy stores globally (about 1,200 in the U.S.). “We have a presence in just about everyone’s neighborhood,” Hall said. “You can walk into a Best Buy with a box of stuff.”

That, in theory, could address the huge hassle factor. Let’s say some consumers know they have three old cell phones in the drawer, an out-of-date printer in the basement and the living room houses a fully functional DVD player (but they just made the switch to Blu-ray and no longer use it).

If the dollars are relatively minimal, many consumers won’t bother to wrap up these items in old newspaper and bubble wrap (why make even fewer dollars because the DVD player acquires some new nicks in transit?) and wait in line at the Post Office, especially when they won’t likely really know how much money they will get from the sale. After all, if the dollar value drops, the transaction may no longer be worth the effort.

There’s also something unnerving about sending possessions out in the mail and then hoping that a check will somehow get back to you weeks later. There’s a level of trust in the system that not everyone has.

The way Best Buy is envisioning this resale approach working, Hall said, is that consumers would simply bring in their used merchandise (having been purchased from anywhere) to a nearby Best Buy. No packing necessary. In the store, someone would evaluate the items and make an on-the-spot offer. If it’s accepted, the consumer is issued an immediate store credit for the items and relieved of her junk. Within minutes, the used products are put into the Cow Boom system, en route to refurbishment (if necessary) and resale. Presto: A SKU is born. Or perhaps reborn.

But the really interesting part is the IT potential. CRM would now profile not only customers but products, and then try and connect the two. On a product profile, that CRM data might include the point where it will likely be replaced and with what. It would factor in the item’s resale value and at what point that price will fall and how quickly.

That pricing will also have to factor in the individual situation of each consumer. “There’s a threshold that every person will have. How much is the effort worth?” Hall said. “At any given point, everyone is in the market for something.”


8 Comments | Read Best Buy’s Trade-In Plans: “Why Let eBay Have All The Fun?”

  1. Robert Olson Says:

    When will it start? I have a load of DVD players, and even some VHS’s that are in good shape, but unused!

  2. Larisa Hall Says:

    Hi Robert – today you can use the online tool for products bought at other retailers, or walk into Best Buy to trade in products bought at Best Buy.
    Details are here:
    We will let people know when the full circle solution is in place. Thanks!

  3. Karyn Cooks Says:

    Brilliant idea. Win for Best Buy. Win for consumers. I predict a dramatic increase in synchronous & asynchronous Best Buy satisfaction web chatter. Congratulations on rethinking the old wheel.

  4. Brenda Rayburn Says:

    Someone is either uninformed or does not understand how eBay works.

    “There’s also something unnerving about sending possessions out in the mail and then hoping that a check will somehow get back to you weeks later. There’s a level of trust in the system that not everyone has.”

    Uh, no.

    Just like Best Buy’s online sales, bidders and buyers pay first.

    And you receive cash or its equivalent vs. BB’s store credit.

    I’ll take the cash, thank you.

  5. Dixie Kimsey Says:

    This is an excellent idea! I already love shopping at Best Buy. Now I can get rid of junk and buy much wanted electonics to replace that supposed “void.”

  6. Dan Says:

    I agree with Brenda. Why would I want to take my old junk stuff into a Best Buy store and then only get store credit. If I’m trying to get rid of it I am going to be looking for the cash. I am willing to bet that the amount that they will give you in store credit isn’t anywhere near what you could get on ebay or craigslist. Now if they ever decide to give cold hard cash for my junk will someone please let me be the first to know.

  7. Ashley Says:

    First of all why would a store not give you store credit instead of cash… business decision wise that would be a poor one.

    Secondly you’re probably more apt to get more money back if you receive it in store credit than if you were to receive it in cash because they (Best Buy) want you to BUY expensive items from their store to replace your old ones.

  8. Greg Says:

    Actually it looks like you can receive cash for your trade-in. I just received a quote on my old 1st gen xbox and can choose either $26 on a giftcard or $17 through a mailcheck.


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