A version of this article ran in the October issue of Bicycle Retailer & Industry News.
RICHFIELD, Minn. (BRAIN) — Best Buy's announcement in August that it would enter the e-mobility space is actually a return to the marketplace for the big-box behemoth.
In this latest go-around, Best Buy will be offering e-bikes from Bird, Huffy, Quietkat, and Swift, along with a selection of e-scooters and e-mopeds. If this rings a bell, back in 2009 Best Buy announced it would hold inventory for six different IZIP e-bike models and two different e-scooter models from Currie Technologies, at the time the country's biggest e-bike distributor.
The president of Currie Technologies then, Larry Pizzi, remembers well Best Buy's initial foray, which lasted about two selling seasons.
"I had to smile when I heard they were coming back in," said Pizzi, now Alta Cycling Group's chief commercial officer. "I think what they're doing now is a bit of an unanswered question. What it looks like they're doing is sort of leveraging their website traffic and getting most of the brands to dropship. They may have a broader plan."
BRAIN contacted Best Buy in September to uncover its retail strategy this go-around. The retailer's representatives declined to say if it will be holding inventory or having brands dropship. They also would not comment on its previous foray into the market. Many — if not all — of the senior-level decision-makers from the 2009 venture are no longer there, Pizzi said.
A Best Buy spokesperson did say, "The world of e-transportation is growing and innovating quickly, and these products are becoming more technologically advanced than ever, which makes them a great fit for Best Buy, knowing we're the experts in tech and the services that go along with it."
E-mobility options online and in store
Best Buy currently has some e-mobility models available through its website and a handful of retail stores in Austin, Texas; Los Angeles; Miami; New York; Orlando, Florida; Puerto Rico; San Francisco; Seattle; and Tampa, Florida. The retail stores have had bikes on the floor since the beginning in October.
The store's Geek Squad will offer at-home assembly, setup, and advice for $99 for those buying online or in-store. Best Buy is not servicing e-bikes at this time but is "continuing to look at ways we can better serve these customers' needs,'' the spokesperson said.
Offering that service component will be key, much like successful IBDs, who can explain the price differences by noting component spec', offer test rides, and accessorize after the sale.
"Part of what makes Best Buy stand out as a retailer is our ability to not just sell products to our customers but to serve their needs throughout the entire process," the spokesperson said. "We definitely see our expertise from our Blue Shirts and Geek Squad agents as an advantage and a key asset."
When Best Buy last decided to sell e-bikes, it was partly in response to having open floor space, with videos and music rapidly going online at the tail end of the 2000s.
"There were a couple people on their strategic development team that were pretty high-ranking in the organization that had experienced e-bikes, and they approached us along with a couple other brands," Pizzi said.
Pedego was one of the brands that Best Buy contacted before its 2009 e-bike venture, confirmed Pedego's CEO Don DiCostanzo. DiCostanzo said he was pessimistic about Best Buy's plan then and declined.
"The problem is, selling electric bicycles in any mass retailer is that there's no opportunity for customers to try them out first," DiCostanzo said. "They can't test ride them in the parking lot, and even more importantly, they don't have the skill to properly fit a customer to the right electric bike."
Even without Pedego, Best Buy created a portfolio and invested heavily in a limited number of stores, between 25-30, Pizzi said.
"They created displays, counter service, where you could get detailed information about the product," Pizzi said. "They planned on staffing this section, and then they were using their audio install department, their mechanics and techs, and they purchased tools and repair stands from Park Tool and everything so they could set up and assemble and provide limited test rides and the after-service. It was pretty substantial because it gave us sort of national exposure for the IZIP brand."
Quick departure
Then, just like that, they left the marketplace, saying they wanted to use more floor space for appliances. Pizzi said Currie Technologies had invested heavily in supporting Best Buy, but he said the experience was still positive.
"We were able to recover from it. So no harm, no foul. It was a great experience for us as an organization, and I don't have any regrets. On the coattails of that, we were able to gain a significant amount of distribution in IBDs and e-bike specialty retailers. It all worked out for us."
IZIP is now owned by Alta, which also distributes Diamondback and Redline.
While Best Buy didn't reveal why it pulled the plug 10 years ago, it's safe to assume the segment didn't meet expectations. After all, at that time, the micromobility market was more complicated, without the credible drive systems from suppliers like Shimano and Bosch, Pizzi said.
"There was a lot of hand-holding that needed to be done with the consumer at that point in time," he said. "The space has progressed dramatically since then. It's afforded companies like Rad (Power Bikes) to be able to do a significant direct-to-consumer business. But to support these sales, Rad has a huge call center and customer service department to handle warranty and after-service, right out of the service bay."
Best Buy's re-entry affords brands that don't have significant distribution an opportunity to join with a marketplace juggernaut.
"Brands are looking for distribution, and they'll probably have a lot of them knocking on their door," Pizzi said. "I guess for them, if they're putting inventory in their distribution centers, that's a whole different scenario than if they're having brands dropship the product to end consumers. My understanding is they are doing the latter with e-bikes, because it doesn't present a tremendous amount of risk for them and puts the burden on the brands to take care of the end consumer. Maybe (Best Buy) is just dipping their toe in the water, saying, 'Hey, we're in this space. Check it out,' but I'm only speculating."
Bird wouldn't comment on if it is dropshipping. A Quietkat spokesperson told BRAIN in late September that Best Buy had not determined the allocation method. "We are prepared for both models and can support both in-store inventory and online sales," said the spokesperson for Quietkat, which was recently purchased by Vista Outdoor.
Both brands said Best Buy is the right partner at the right time.
"With demand for e-bikes surging during the pandemic, Best Buy gives consumers another option to access micro-electric vehicles, such as the Bird Bike, that can replace gas-powered vehicle trips with low-emission rides," the Bird spokesperson said.
"Best Buy has a long history with electronics and new technology, and we feel like their distribution and customer base will align perfectly with Quietkat's expanding product line," the Quietkat spokesperson added.
Huffy did not respond to requests for comment.
Broader approach needed this time
To be successful this time, Best Buy needs to take a broader approach, Pizzi said, including after-service and test ride opportunities, which can create complications for a big-box store. DiCostanzo remains skeptical.
"What happens when a customer gets a flat tire or needs some type of repair done?" DiCostanzo said. "Unless all the Geek Squad folks are trained to be full-blown bicycle mechanics, this is doomed to fail. Electrical experts do not necessarily make good bicycle mechanics."
He also said mass retailers who sell e-bikes — like Costco, for instance — have had high return rates. "That makes it a disaster for the companies that sell to them because they have to accept all the returns. I understand that it's been over 30%. I could name a couple of electric bike companies that have sold at Costco that are no longer in business today, likely because of their Costco relationship."
While some might be surprised Best Buy has re-entered the e-mobility market, Pizzi is not.
"It falls into the electronics category," he said. "They know how to deal with electronics. They are a powerful retailer. But e-bikes are hugely complicated. They can have some modicum of success selling online. (But) they don't have their own brand, which means they have to buy at wholesale and make a margin and sell at retail. This will make it difficult to compete with the direct-to-consumer brands unless they can find a way to add value the way a specialty retailer can."
