Buy.com to Become a Marketplace-only Site, Hopes to Take on Amazon

Changes are afoot at Buy.com. There's a new focus, new name, and big goals. But what does it mean for deal seekers who have long relied on Buy.com for low cost consumer electronics? dealnews spoke with Bernard Luthi, Chief Operation Officer and Chief Marketing Officer of Rakuten.com Shopping to find out.

First, let's talk about the site's name. Not too long ago in May 2010 Buy.com was acquired by Japan-based Rakuten. You might have noticed the inclusion of the word "Rakuten" over the Buy.com logo of late, or the Rakuten Super Points rewards system. Rakuten (which means "optimism" in Japanese") has been transitioning to a new business model to be unveiled at the end of January. From that point on, the site will be called Rakuten.com Shopping and will have a marketplace model populated by individual merchants. This means that everything on the site will be sold via independent sellers, whereas previous iterations of Buy.com — as well as other retailers like Amazon and newegg — had just a portion of the site devoted to these sellers.

But fear not, Buy.com will live on as a merchant site within the online marketplace. "We will maintain Buy.com as a merchant within the platform. It will continue to exist," Luthi assures us. "It's a really strong consumer electronics retailer and we are going to accentuate that strength. The dealnews reader will still find great hardware and [consumer electronics] deals through Buy.com as a merchant within the [Rakuten] site."

Focusing on the User Experience

Much of the re-launched site will be populated by sellers hawking products across a wide range of categories including home, outdoors, soft goods, even musical instruments, said Luthi. The focus will be on "quality merchandise over quantity." There will therefore be less focus on the price-driven model of discounted goods (and the low-priced technology items that Buy.com was known for), and more on unique merchandise and personalized service.

Since its buyout of Buy.com, Rakuten has been making a series of international acquisitions with the goal of building a global marketplace where individual sellers can create dedicated shops with unique identities, said Luthi. This idea of merchants building their own brands and forging more personal bonds with shoppers is core to the new model as Rakuten seeks to differentiate from marketplace competitors like Amazon, which is believed to derive a significant amount of revenue from its marketplace ventures.

"There are a lot of merchants who just list and forget, and move on to the next exchange," said Luthi of the typical marketplace environment. "You end up having a lot of similar SKUs across the exchanges. [Rakuten] really celebrates the merchant. [Their products aren't] just SKU listings in a marketplace."

Merchants are expected to fill product pages with rich content and interact more directly with customers. Rakuten believes this experience will motivate merchants to offer better deals, information, service, and differentiated products, and in theory will weed out potentially inferior sellers. "Price will always be a component in ecommerce, but this is more than the deal," he said. "It's about the experience: the discovery of something unique. We're trying to blend it all together in a unique shopping experience."

"If you look at the average marketplace — Amazon, newegg, or Sears — they all play in the same marketplace fashion," said Luthi. "At times, it's difficult to know if you're buying from a merchant or from the site directly. The genesis of Rakuten was different. It started as a way to give merchants an ability to have a presence online without losing their identity."

Will Rakuten.com Shopping Score with U.S. Shoppers?

While the corporation may face an uphill battle trying to win name recognition and build a brand in the U.S., Rakuten is experienced in this business model. Starting out as a marketplace operator in Japan, the enterprise has gone on a buying spree over the past three years acquiring sites in various countries, as well as technology platforms to help it grow. The company is also an investor in the visually-rich Pinterest, which seems fitting given Rakuten's emphasis on storefront curation and experience.

Rakuten's ultimate goal is to build a global online marketplace to rival that of Amazon, and sites such as Buy.com will act as resident retailers — complete with inventory and unique identities. These merchants will in turn pay membership fees and commission to Rakuten.

But does Rakuten have a chance? Readers, do you think the concept of a more manicured marketplace environment will be successful amidst the established big name retailers? Will it give you more confidence in the sellers, or do you only care about who offers the cheapest prices? Sound off in the comment section below.

Front page photo credit: Internet Retailer
Photo credits top to bottom: Go to the Marketplace and TechCrunch