Best Buy has announced its new marketplace that will offer 2x the product assortment. The electronics seller will now have a larger selection of computer products, licensed sports merchandise (a Fanatics fan shop), and small appliances. musical instruments, and indoor and outdoor furniture. Why will this work now?
Best Buy started an online marketplace in 2011, and in 2016, it was forced to close its third-party marketplace because it only contributed 1% of group revenue and created returns.
Yet, in 2025, Mirakl convinced Best Buy that it needed a curated marketplace. I wrote in 2016 that the marketplace business model is not for everyone.
Consumer perception
I believe that consumers cannot be retrained. Once a consumer perceives that a platform only sells a specific sector’s products, that perception stays in the consumers mind. Consumers think of BestBuy as an electronics retailer not a horizontal marketplace with a curated selection of goods with electronics.
BestBuy will need to invest in marketing to change the consumer perception it has created with consumers. Are you going to buy sports team apparel from BestBuy or from Fanatics?
Mirakls inconvenient truth
Name me a retail partner who has used Mirakl’s technology to create a sustainable marketplace? I will wait. Everytime I hear their podcast advertising that they have 450 marketplaces, I wonder how successful these retailers with thirdparty marketplaces are.
Mirakl has created a perception that every retailer needs a marketplace. Marketplace business models have their own challenges which place another level of pressure on retailers. Mirakl is a late stage startup on the road to an initial public offering (IPO) and their original thesis of marketplace solutions required a focus on retail media networks to grow their revenues.
Target and Kroger both have used Mirakl’s technology to scale a curated marketplace. Can anyone tell me when last we have heard of it? Target’s last earnings call made it clear to me that they are not remotely close to scale it.
Scale versus curated marketplaces
We have seen Amazon scale its marketplace business with third-party sellers and have grown its services and advertising revenue due to its significant scale.
Best Buy claim to have 200 million customers, 10 billion annual website visitors, and more than one million transactions per week.
Amazon has 310 million customers worldwide, 2.6 billion to 2.8 billion monthly visits (I will extrapolate that Amazon receives between 25-30 billion visits annually), and 12 million transactions per day, and it ships more than 1 million packages per day.
Amazon is an outlier and is unlikely to be rebuilt via a third-party software solution. Amazon has grown over a 25 year period due to a culture that continues reinvests itself. Best Buy does not have 25 years to grow its third-party marketplace.
Marketplaces is a scale game and without the large numbers of consumers that have a transactional nature with the platform and leads to higher conversion rates than normal platforms. Mirakl has created a mirage that makes marketplaces the answer to challenges for retailers.
Marketplaces and Retailers
While I have said its easier for retailers to add marketplaces (hello Walmart) than marketplaces to add retail to it (hello Amazon). In both cases these platforms were designed to be horizontal rather than being a vertical specificic platform.
Retail is hard, marketplaces are harder. Both are low margin businesses which requires additional solutions to grow margins such as services, advertising to grow margins.
I am looking forward to reading Mirakl’s IPO documentation once they go public but I am not a believer in their business.