Category Creation

4Special Considerations for Established Companies in Commoditized Markets

The year is 2012 and the team at Amazon is busy asserting their dominance as the web’s largest retailer by invading any tangential territory even slightly related to their business. The company had just released new e-book readers and tablet hardware, acquired a book publishing company, and even opened up a social gaming studio. While these investments may seem a few steps removed from their core retail business, Amazon CEO Jeff Bezos is intentionally and masterfully executing his plan of building a content ecosystem of apps, books, music, and movies as a competitive moat around the Amazon brand.

Within the core business, the historic success of Amazon had ushered in for the market at large what some commentators have referred to as the “retail apocalypse.” The Amazon effect was felt across both Main Street and Wall Street, as mom-and-pop stores were forced to embrace the rising e-commerce trend, while major big-box stores were at the risk of going out of business by losing to the convenience that Amazon introduced to the market. From 2015 to 2019, over 68 major retailers filed for bankruptcy, according to CB Insights,¹ citing issues such as mounting losses and drops in sales. One of the companies caught in Amazon’s cross-hairs was Best Buy, who seemed to be one of the last electronics retailers standing after the collapse of Circuit City, CompUSA, RadioShack, and others. Best Buy was bleeding money ...