Amazon is busily building up a technology consulting and installation offering that could rival Best Buy’s long-standing Geek Squad services, Recode reported Monday.
Under the new services, an Amazon technology expert would visit customers’ homes to offer, for example, 45-minute consultations on how best to take advantage of Amazon Alexa virtual assistant capabilities, or to install — for a fee — smart home products such as Ecobee thermostats that respond to Alexa voice commands, according to Recode.
The report of the new services, which appear to be similar to what Best Buy offers through its Geek Squad unit, drove down Best Buy’s stock price by at least 7% at one point, translating to about $1 billion subtracted from the retailer’s total market value.
If Amazon really is looking to directly challenge Best Buy’s Geek Squad, it’s going to be all kinds of awkward for the Best Buy store associates who have been charged with demonstrating Amazon Echo smart home capabilities for customers in-store.
Best Buy has been having a good run in recent months, at least in part because it has started establishing a niche for itself as a retailer offering smart home products from different makers. Consultations and installations of smart home products seemed like a natural fit for Best Buy’s army of 20,000 Geek Squad agents.
Now, Amazon appears to be making a very similar play, not that any of this should come as a surprise. With the Echo devices and Alexa, Amazon has long been positioning itself at the center of the smart home frenzy. It also has a well-established reputation as a market disrupter, wading into markets where it believes it can overthrow the status quo — the grocery market being one of its latest targets. This move makes a lot of sense for a one-time pure-play e-commerce giant that is trying to get into every aspect of retail it can.
However, despite Amazon's reputation, the financial market reaction suggests that a lot of people — or at least a lot of investors — didn't see this move coming. Amazon's tech help effort remains at an early stage, having reportedly launched in about seven West Coast markets. And while it's not clear what size the tech expert workforce is now, it's probably nowhere near the 20,000 Geek Squad agents Best Buy has in the field. Though Amazon tech experts may be especially adept at helping customers plan Echo/Alexa-centric household installations, Geek Squad may bring a broader array of experience and knowledge to bear. All of which makes the panic to sell Best Buy shares seem a bit, well, panicky.
Amazon is still new enough at its own brick-and-mortar efforts that physical retail giants like Best Buy continue to be valuable partners for Amazon. Best Buy has been dealing with Amazon treading on its turf for years now. The threat of Amazon's new service may be very real for Best Buy, but right now it's unclear whether Amazon will revolutionize this particular category in the same way and at the same pace that it's disrupting grocery.