Best Buy's Marketplace Integration Primarily Focuses on Advertising Income
Cease the small talk, let's dive into the meaty stuff! Best Buy's latest venture into the US marketplace, set to drop this summer, isn't merely about enhancing their product roster - it's also about creating a more robust advertising business. While retail giants Amazon and Walmart have successfully milked their marketplaces for ad revenue, Best Buy's opportunity is just brewing. By building a thriving third-party marketplace, they stand to monetize more searches, tap into an untapped pool of advertisers beyond their existing roster of bigwigs, and concoct new ad formats to fit their expanded product selection.
As CEO Corie Barry outlined during the company's earnings call, the marketplace and ad business are "two peas in a pod," with the marketplace expected to "open doorways for Best Buy Ads via fresh advertisers and increased web traffic."
It's not Best Buy's first rodeo when it comes to marketplaces. They debuted one back in 2011 and ran it for five yearishing years until its premature demise around 2016. However, the retail landscape has changed dramatically since then. Best Buy's timing for this second marketplace attempt lines up with two significant trends: the maturation of retail media networks and the ascension of marketplace operations sophistication.
Best Buy is teaming up with Mirakl, an enterprise marketplace technology company that boasts partnerships with retail heavyweights like Macy's and Kroger, to build its new platform. Plus, they have the advantage of learning from their Canadian marketplace operation, which has been chugging along successfully for several years.
"This is one of those places where we have a leg up since a chunk of the company has been wrestling with Marketplace," Barry informed analysts during the company's Q4 2025 earnings call. An analyst on the call cited a statistic that, in Best Buy's Canadian marketplace, one out of every four items shipped is from a third-party vendor, which could serve as a roadmap for U.S. growth.
The Ad Connection
Enlarging the product assortment might be one motivation for launching a marketplace, but the ad potential might be even more tantalizing. Best Buy's leadership spelled out this link in their recent communication with investors, portraying Best Buy Marketplace and Best Buy Ads as key components of their fiscal 2026 strategy to "launch and scale incremental profit streams."
This strategy echoes that of the most successful retail media networks. Doug McMillon, Walmart's CEO, articulated this strategy plainly in 2022: "Growing our marketplace expands options for our customers, helps our sellers grow, and boosts our profit margins. As we onboard more customers, sellers, and suppliers into our ecosystem, it increases our ability to monetize those relationships... And as our e-commerce operation, including marketplace, continues to expand, so will our ad business."
In their Q4 FY25 earnings, Walmart announced its marketplace surged 34% in the U.S., and Walmart Connect revenue climbed 24% year over year - mind-blowing growth within a company that increased by 4.1% overall. And Walmart calls out advertising specifically as a high-margin business, fueling increased operating income.
The Long Tail Advantage
One of the most compelling reasons for Best Buy to construct a marketplace is to cultivate a more diverse advertiser cohort. According to research from Pentaleap and Colosseum Strategy, Best Buy currently sports a highly concentrated advertiser base compared to marketplace-based competitors. (Disclaimer, Pentaleap is a client of mine)
While Amazon derives 58% of its ad impressions from "long-tail" advertisers (those representing less than 0.2% of overall impressions) and Walmart achieves 46%, Best Buy gets just 3% from this diversified base. Instead, 77% of Best Buy's ad impressions come from a select few major brands - a precarious situation if any of these advertisers decide to rein in their spending.
This concentration predicament isn't unique to Best Buy. The research indicates that non-marketplace retail media networks typically see only 15% of ad impressions stemming from mid- and long-tail advertisers, compared to 54% for marketplace-based networks.
A booming marketplace brims with the power to alleviate this issue by bringing in hordes of small sellers who might then become potential advertisers. These sellers often exhibit stronger incentives to advertise, as they need visibility to keep up with established brands and first-party products.
"The most profitable digital ad businesses in existence today - including Google and Meta - also prospers from their long tail of advertisers," retail industry analyst, Andrew Lipsman, stated. "This extensive base not only offers a solid foundation for growth; it also fortifies the platform against spending cuts from any single advertiser."
Seller Perspective: Mixed Reactions
Initial reactions from potential marketplace sellers have been mixed, per interviews with some brands in the consumer electronics sphere.
Bernie Thompson, founder of Plugable Technologies (which produces laptop docking stations and USB products), expressed enthusiasm about being among the pioneering brands accepted into the marketplace. "We're stoked to be among the early brands welcomed to Best Buy's new Marketplace," Thompson told me. "Best Buy is synonymous with electronics. We believe it's a great fit and hope we can make a positive impact for Best Buy and their customers."
Thompson sees an opening for Best Buy to distinguish itself through better curation. "Amazon has a sophisticated but chaotic curation system... that also has long-standing defects that lead to an increasing number of fly-by-night Chinese brands on the platform. Best Buy has an opportunity to stand out if it can establish and maintain the Big 5: selection, pricing, speed of delivery, customer trust, and brand trust."
However, others express concerns about potential channel conflict. One consumer electronics brand executive, speaking on background, conveyed their apprehension that "we have authorized 3P sellers that are anxious to peddle on the Best Buy marketplace, which creates channel competition and ultimately creates a situation where we compete against ourselves."
Rahul Saraswat, SVP of Ecommerce at Aventis Systems, a company that sells consumer electronics and IT hardware across various marketplaces, stated they would "definitely give this marketplace a shot" given the natural fit with Best Buy's customer base. However, they added that "a lot would hinge on how well the marketplace performs and how favorable or unfavorable the costs and terms are."
On the ad connection, Saraswat was more skeptical about whether retail media expenditure proportions correspond with marketplace presence. "For us, they don't because Amazon serves as the 10-ton gorilla in the room. We are an Amazon-first business, and the majority of our ad spend dollars support that channel."
Building a Distinct Marketplace
Best Buy's US marketplace appears to be taking a somewhat different approach than its Canadian counterpart. While the Canadian marketplace has traditionally homed in on refurbished and renovated products, CEO Corie Barry indicated that the U.S. version would offer "even more new products" and "multiple versions of the same SKUs."
The company is also planning phased implementation of seller-friendly features. At launch, Best Buy will facilitate product returns at physical stores, with "capabilities such as fulfillment as a service for sellers" coming later. This fulfillment ability is a vital enabler for third-party resellers. A significant draw for both Amazon and Walmart's marketplaces is the ability for sellers to tap into the logistics capabilities of those retailers. Not having to store inventory or fulfill orders makes the platform accessible to more sellers. Entrusting orders to Best Buy also instills more trust among consumers.
To safeguard its brand reputation, Best Buy emphasizes that "all potential sellers will go through a vetting process, so we can ensure our customers receive the positive experience they would expect at Best Buy."
Financial Expectations
Regardless of start-up costs and potential sales cannibalization, Best Buy's leadership anticipates the marketplace to have "a favorable impact on our operating income rate" in fiscal year 2026, though they declined to provide specific revenue projections.
CFO Matthew Bilunas informed analysts during the earnings call, "We would see both [Marketplace and Ads] to persistently present, I would say, some revenue and profit opportunities as we push forward... those would both be contributors to helping us expand an operating income rate as we get into the next couple of years."
The marketplace launch is planned for mid-2025, so its full financial impact won't be felt until the subsequent fiscal year. However, the company's leadership views it as a long-term strategic investment rather than a short-term revenue boost.
As retail metamorphoses, Best Buy's marketplace reboot underscores how extensively the playbook has altered since 2016. For today's retailers, a marketplace isn't just about widened selection - it's about constructing the foundation for a more sustainable advertising business with a varied base of smaller advertisers complementing established brand relationships. The success of Amazon and Walmart suggests this strategy works. The question now is whether Best Buy can execute it effectively the second time around.
- Retailers like Best Buy, Amazon, and Walmart and their SVPs acknowledge that the retail media and ecommerce sectors are intertwined, as the marketplaces of these retailers serve as enablers for robust advertising businesses.
- Best Buy's SVP, Corie Barry, states that the new marketplace and ad business are "two peas in a pod," with the marketplace expected to serve as an enabler for Best Buy Ads by opening doorways for additional advertisers and increased web traffic.
- With the maturation of retail media networks and the ascension of marketplace operations sophistication, Best Buy's timing for their second marketplace attempt is strategic, aligning with the current retail landscape.
