Amazon’s had a big advantage competing with Best Buy‘s Web site: It seemed to be caught in “a 10-year time warp to 2002,” the retail chain’s global e-commerce and marketing President Scott Durchslag confessed in a remarkably frank presentation this afternoon to investors attending the Goldman Sachs dotCommerce Day. That’s about to change. Best Buy, which has 1B online visits a year, is “catching up to where the site should have been.” For example, the search engine has been overhauled to find exactly what the consumer wants, not something similar. The mobile app will tell people where to find the closest store, and what deals it offers. Best Buy also will create a a virtual currency that gives visitors points if they do things such as write a review or post a purchase to Facebook. The company plans to offer opportunities for people to read reviews written by friends anywhere on the Web, not just at the Best Buy site.

Chief Administrative Officer Sharon McCollam also talked up initiatives to integrate digital with the bricks and mortar stores. She hopes to slash instances where online customers are told that something they want is out of stock at the nearest store — when 80% of the time it’s available at another store nearby. “It’s not clear to me why they did not take this to the ultimate conclusion and ship it to the store if you don’t have it,” she says. She hopes to have this fixed at a few hundred Best Buys by Christmas, and throughout the chain within a year. She also wants to make better use of items that consumers return. “Today the majority of the inventory is boxed up by the store in a not-great way. they ship it to a return center and the majority is sold to liquidators. We are allowing others to sell it and compete against us.” Instead, Best Buy will sell the merchandise online as “Geek Squad Certified” returned or refurbished.

Execs say that the chain will position itself as a 21st Century coliseum for consumers who want to see what Durchslag called “four giant [electronics] gladiators competing”: Apple, Microsoft, Google, and Amazon. The retailer says it’s the only place where people will be able to “see all of them and get the pieces that are best for you.” As for price, he says Best Buy merchandise is “about 2% less than Wal-mart, and close with Amazon on the hardware side and [has] narrowed the gap on software.”