Best Buy Co. and Amazon.com Inc. see the future of selling electronics -- and it's happening in your living room.
Continue Reading Below
Best Buy is hiring hundreds of salespeople to sit down with consumers inside their homes and recommend the electronics they should buy, part of a free service it has been testing in several cities and plans to roll out across the U.S. this fall.
The company hopes its in-home salespeople will help drive sales of TVs and gadgets at a time when fewer people are visiting shopping centers, as well as drum up business for Best Buy's Geek Squad, which provides tech repairs and in-home installations for a fee.
The new program "allows us to unlock latent demand," said Best Buy Chief Executive Hubert Joly. "What we're finding is people in the home tend to spend more because we address a bigger need for them compared to what they spend in the store."
Amazon, meanwhile, is expanding a program that sends its employees into homes to provide free "smart home consultations" and let shoppers test its Echo smart speakers and voice-controlled devices. These consultants can also provide fee-based installation services after shoppers purchase the gadgets on Amazon.
The company launched the service in its home market of Seattle in July 2016 and has since expanded to six other cities. It has job listings for technicians in additional markets, such as Chicago and Hoboken, N.J.
Continue Reading Below
Rohan Joseph recently spent an hour walking room to room in his Seattle suburb home with an Amazon technician, discussing everything from smart light switches to locks. He already has a few Echo Dot speakers and an Echo Show, and was curious to see what else Amazon would recommend. "We're about to have our first kid, so there were a couple things related to the nursery," the 34-year-old said.
Mr. Joseph said he hasn't yet purchased any of the recommendations -- but much of it is on his wish list. He didn't feel any pressure to buy. "That's what I liked about it," said the CrossFit studio owner. "He wasn't trying to sell me anything."
Best Buy, which had revenue of $39.4 billion last year, controls about 29% of the U.S. market in consumer electronics, followed by Wal-Mart Stores Inc., with 14%, and Amazon, with 11.2%, according to research firm TraQline.
Best Buy's modest growth over the past five years has stood apart in a retail industry that has struggled with declining foot traffic and a glut of stores. The electronics giant, whose shares are up 45% so far this year, is slated to report second quarter results on Tuesday.
Unlike its Geek Squad workers who fix gadgets, Best Buy's in-home advisers are traveling sales consultants who are paid a salary or on an hourly basis, not commissions. Based on the customer's needs, they provide product recommendations from HP and Apple laptops to Amazon Echo and Google Home devices. Prices are the same as in the company's store or website.
"They get my cellphone number and can call me for any of their needs," said Jeremiah Goldsmith, 40, an in-home adviser in Austin, Texas. After a consultation, Mr. Goldsmith arranges everything from Geek Squad repairs to installations and deliveries. He also makes repeat home visits, free of charge.
At Amazon, the in-home appointments are booked via its website and a different employee could come out for a second trip, though armed with data collected from previous visits.
Amazon, like Best Buy, charges for installations. For example, installing a smart doorbell costs around $99.
"Amazon Smart Home Services isn't just about buying or even installing smart home products, it's about educating customers on how it all works and customizing the products," said an Amazon spokesman.
To free up costs for new services, Best Buy has been outsourcing some tech support jobs at its Geek Squad unit to Accenture, which offers cheaper labor in the Philippines. Last month, the retail change eliminated about 400 U.S. Geek Squad positions for online and phone tech support.
The company said it has about 1,000 job openings and encouraged laid-off workers to apply. "Using that highly skilled labor in people's homes and in our stores, directly interacting with customers, seems like the very best way we could humanly use that asset," said Best Buy finance chief Corie Barry.
Increasing face-to-face interactions in the home could help with sales of extended warranties. Warranties accounted for nearly $900 million of Best Buy's $40 billion annual sales, but analysts say the high-margin offering made up a significant share of the company's profit, which was about $1.2 billion last year.
Amazon is vying for market share with Alphabet Inc.'s Google and Apple Inc., both of which have been working on their own voice assistants for the home. Google and Apple, which will begin shipping its HomePod in December, don't currently deploy in-home salespeople.
Best Buy is hoping its brand-agnostic approach will give it a leg up when it comes to consultations. "Despite what the vendors might want, there's no customer who has only one brand in the home," said Mr. Joly, the retailer's CEO.
"This is not a zero-sum game between Amazon and Best Buy," said Mr. Joly. "There's room, frankly, for several players."
Write to Khadeeja Safdar at email@example.com and Laura Stevens at firstname.lastname@example.org
(END) Dow Jones Newswires
August 28, 2017 12:45 ET (16:45 GMT)