Best Buy, etown Forge Ties Amid Flurry Of Web Alliances - Twice

Best Buy, etown Forge Ties Amid Flurry Of Web Alliances

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In the latest round of Internet alignments, etown.com has formed a partnership with number-one CE retailer Best Buy.

Under the multi-year agreement, etown, the CE information and e-commerce site, will provide its news, reviews and other editorial content to Best Buy's cyberstore, BestBuy.com. In return, the megachain has taken a minority stake in etown by contributing to part of a $23 million financing plan.

In addition, Best Buy will join etown's 14-member DealerWeb federation of brick & mortar and online fulfillment partners that includes One Call, Harvey Electronics, United Audio and 800.com.

According to etown CEO Robert Heiblim, "Best Buy liked our content and thought it deserved some financial support. They also like the idea of partnering to drive their click & mortar strategy."

Best Buy is still busy overhauling its Web site, which sells only music and movies but is expected to have full e-commerce capabilities early this year.

Separately, etown also announced an alliance yesterday with ZDNet, the online electronics news arm of publisher Ziff-Davis. The deal mirrors the Best Buy pact in that etown will provide branded content to ZDNet in return for the minority position ZDNet took in its latest financing round.

The announcements follow a recent flurry of strategic online alliances, including last month's marriage between Best Buy and Microsoft. Under that agreement, Best Buy will offer Microsoft's MSN Internet access and other connectivity services in all of its stores and on its e-commerce site.

Microsoft, in turn, is buying up $200 million in Best Buy stock, representing about 2 percent of the company, and will give the retailer and its Web site prominent placement across all of its online and cable properties, including MSNBC, Expedia.com, Hotmail, WebTV Network and MSN eShop.

Best Buy chairman Dick Schulze said the alliance will position his company as the "preferred click & mortar provider" of entertainment and technology products and services. Microsoft chairman Bill Gates described the deal as a good fit with his "Everyday Web" strategy of making the Internet as prevalent as the telephone.

It was the second dance with a CE chain for Microsoft, which had forged a similar pact with RadioShack in November. Tandy offered no comment on news of the Best Buy pact.

Meanwhile, a new cyber pairing was also announced last month between Circuit City and America Online. Circuit said it will sell AOL-subscribed narrowband, DSL and satellite Internet access in dedicated sections of its stores, and will promote AOL and its services in its advertising and marketing campaigns.

In return, circuitcity.com will become an anchor tenant in AOL's CompuServe, Netscape and AOL.com shopping portals.

The deal had been widely expected after AOL lost out to Microsoft in its bid to be RadioShack's exclusive ISP.

As etown's Heiblim observed, "You wind up with a lot of strange bedfellows online. While there's a risk of losing a sale to your e-tail partners, you're always just a click away from the competition anyway. That's unlike the physical space, where a shopper may be too tired to drive to another store. So it's better to work with them than compete against them."

Added Shauna Smith, a channels analyst for ARS, "The retailers benefit from such deals through online exposure. The brick & mortar companies are using the partnerships to further promote their own Web sites and sell their products online."

She also noted that the sharing of Microsoft's attentions by Best Buy and RadioShack is probably of little consequence to the merchants. "Microsoft is targeting different types of people. RadioShack is smaller in size and generally sells fewer products but has more locations, while Best Buy sells many types of products out of its huge stores but has fewer locations."

Within hours of the Circuit announcement, AOL and Wal-Mart confirmed a long-rumored partnership in which the world's largest ISP and the world's largest retailer would create a new co-branded Internet-access business. The new, unnamed ISP will be promoted in Wal-Mart's stores and advertising, while Wal-Mart's overhauled e-commerce site will be promoted across all AOL-owned cyber malls.

The AOL announcements also dovetailed with news that Kmart has teamed up with Yahoo and Martha Stewart Living to offer free Internet access through a new e-commerce effort, BlueLight.com.

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