A quick look through the business news over the past few days reveals that very large operations, such as Best Buy and eBay, continue to expand their business into new and more puzzling directions.
Amazon is an old example; they've been in the "everything" business for quite some time. I understood their transition from just books to both DVDs and music, and I understand why they sell both new and used items. But when they started to sell everything else (watches? bicycle parts?) I admit that I didn't quite understand their strategy.
Recently I've seen a number of news articles about other large companies that have embarked on the same idea: if they sell items in category A, while not sell them in category B? Best Buy recently started selling musical instruments; I believe I can understand why. But patio furniture and barbecue grills? And eBay has transformed itself from an auction site to an all-purpose site that sells a great deal of new goods.
Forgive me if I'm wrong, but this seems to be exactly the wrong strategy. eBay's charm and strength came from its selection of auctions; now the company will compete with Amazon in the area of new goods instead of playing to their own strength. eBay seems to believe that since their web site can be infinitely deep and broad, they can profitably and reasonably sell any goods they please under any business model they please. I don't agree.
Best Buy's actions remain utterly incomprehensible. They've chosen to compete with other major chains; I don't see any tie-in between lawn chairs and televisions; certainly the internal dynamics of the sales are completely different — will Best Buy sell expensive & unnecessary warranties for the lawn chairs? This feels like a desperate attempt to grab some business away from competitors during bad economic times.
I have to wonder about the general trend. Some companies believe that the company's brand can be stretched to cover any goods at all. I'm skeptical, as it runs contrary to the consumer's expectations: a company such as Best Buy succeeded in the first place because it was not a department store that sells everything.
Topics: · business
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