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A Bold Green Idea from Best Buy

<p>Although the company&#39;s new Buy Back program -- guaranteeing customers can get as much as 50 percent back when the return their used electronics within two years -- doesn&#39;t quite reach the goal of &quot;sustainable consumption,&quot; it&#39;s a huge step forward in greening consumer electronics.</p>

Imagine that, instead of buying a TV, laptop or mobile phone, and worrying that it will become outmoded, you could lease it, knowing that you could easily upgrade to the next new thing.

We're not there yet, but Best Buy, the nation's largest electronics retailer, with nearly $50 billion in annual revenues, today took a step closer to a subscription model for electronics by offering a Buy Back plan, which invites shoppers to "future-proof" their new gear -- for a price, of course.

They'd pay an upfront fee -- say $69.99, for a laptop or tablet -- and then get 10 to 50 percent of the value of the product back if it's returned within two years, assuming normal wear and tear.

This is smart business for Best Buy, which has struggled lately, and it's good for the planet.

"What we are really after here is stickiness," said Brian Dunn, the CEO of Best Buy, when we spoke by phone this morning.

The Buy Back program encourages repeat business because consumers who bring back gear they no longer want are paid with a Best Buy gift card.

I met Brian Dunn in 2009 when I wrote about sustainability at Best Buy for FORTUNE. (See Best Buy Wants Your Electronic Junk.) The topic then was Best Buy's rollout of free or low-cost recycling, not just for its own products, but for most electronics.

Today's announcement moves closer to closing the loop in the electronics industry. Instead of throwing away unwanted gear, consumers who participate will have an economic incentive to return it to Best Buy, where it can be refurbished, resold or recycled into something else. Electronic waste is, of course, a global problem.

 What's driving the Buy Back idea, though, is consumer anxiety, Brian told me. The plan grew out of lots of listening to consumers, not just in traditional focus groups but in their homes and other places where they use gadgets.

"They are very excited about what technology can do, but they are very apprehensive about the rate of change," he said.

"They want the newest thing, but they don't want to see their neighbor show up with something cooler in a few months," he explained.

In response, Best Buy will offer a Buy Back option in five categories: laptops, netbooks, tablets, post-paid mobile phones and TVs. Consumers will be able to pay a price when they purchase the product, and know how much they will get back when they return it; the buy back promise extends for two years for most products and four years for TVs. Here's the press release with a few more details.

The business strategy here is obvious: Best Buy needs to set itself apart from competitors, particularly Walmart and Amazon. Best Buy has been trying for years to position itself as a consumer-focused company that solves a variety of technology problems, as opposed to a big-box or online retailer that just sells stuff. A key example: Best Buy owns Geek Squad.

Best Buy will be the first big retailer to offer Buy Back. "I think it is a significant differentiator," Brian said, "even when others come along." Best Buy is especially  keen to increase its appeal to early adopters, playing to one of its strengths. As products age and become better known and easier to use, consumers need less hand-holding and are more likely to shop at Amazon or Walmart. Amazon in particular will have trouble matching the Best Buy offer because of the hassle of sending things back to an online retailer.

When I suggested that the Buy Back plan moves Best Buy closer to a subscription model, Brian agreed. He told me:

We have looked at (leasing), and you can rightly expect us to continue to innovate and explore all kinds of models. We are not far enough down the road to say that, boy, leasing is the next step for us. I certainly don't think it's far-fetched to think of a subscription model at Best Buy, where Best Buy is able to provide your technology needs for a monthly or quarterly payment.

So I could lease a TV, a laptop and phone, and then upgrade them as need be? Possible that, and more, Brian said:

I could also administer your network, by remote, with our Geek Squad agents, to keep you optimized and running right. We could also look at what digital services you have and make sure you are not paying too much and are aware of all of the thousands of possibilities.

That would truly set Best Buy apart from its rivals.

It's not quite sustainable consumption, but it's a step along the way.

[Click the image below to enlarge the Best Buy illustration.]

Figure 1

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