Source: Best Buy
Will smart homes be sold in living rooms?
Decades ago, salesmen would travel door to door to explain the magic of vacuums. Do Internet of Things (IoT) products also require in-home visits?
According to an article in the Wall Street Journal, both Best Buy and Amazon are hiring consultants to travel to consumers’ homes to educate, recommend and customize tech items for homes. For both companies, the visits are free and employ a soft-sell, no-pressure approach, although they may lead to sales or fee-based installation or repairs.
Focusing on Echo devices, Amazon launched its “Smart Home Consultation” in Seattle in July 2016. The company has since pushed it out to six cities and is expanding to more markets, according to the WSJ.
Best Buy’s In-Home Advisor program, tested over the last year and a half, is now in five markets and will reach all major U.S. cities nationwide by September.
On its second quarter conference call on Tuesday, Hubert Joly, Best Buy’s chairman and CEO, said its in-home advisors “provide free consultations and serve as a single point of contact covering all technology needs across all vendors. In other words, they can help you design, including place a great entertainment system, help you pick out your appliance for a kitchen model or help you stream music and content across your home without annoying buffering issues.”
At Best Buy, in-store associates suggest at-home consultations for certain customers. While the company plans “awareness building activities” as the program rolls out, word-of-mouth is leading to wait lists for the free advisors in some regions.
“There is an internal debate at the company on how big is this going to be,” stated Mr. Joly on the call.
Amazon’s “Smart Home Consultation” microsite promises to let consumers test drive popular smart home products through interactive demos and learn how to voice-control their home. Amazon states, “We’ve vetted and tested hundreds of products, so we can recommend the best products that fit your needs and budget.”
Neither Google, which sells Google Home, nor Apple, which launches the Siri-powered HomePod smart speaker in September, are offering such services.
- Ding-Dong! Best Buy and Amazon Bring Back the Traveling Salesman – Wall Street Journal
- Best Buy Reports Better-than-Expected Second Quarter Results – Best Buy
- Best Buy’s (BBY) CEO Hubert Joly on Q2 2018 Results – Earnings Call Transcript – Seeking Alpha
- Smart Home Consultation – In-Home Appointment – Amazon
Discussion Questions
DISCUSSION QUESTIONS: Will in-home consultations be critical to driving demand for smart home devices? Which company — Best Buy or Amazon — is better equipped to service the smart home market?
Poll
BrainTrust
Anne Howe
Principal, Anne Howe Associates
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
I think that, initially at least, in-home consultations will be critical — at least for Boomers, Gen Xers and maybe even some older Millennials. But as more and more digital natives enter the home market the demand for remedial technology instruction will begin to diminish over time.
Turnkey solutions — especially those not seen as sales-incentive based — will remove less technologically-savvy shoppers’ concerns about any number of areas from cost to efficacy.
That said, Best Buy has an established reputation for “objective” sales help since its employees aren’t on commission. Amazon, on the other hand, has access to a far greater number of products and services, so it’s bound to be a horse race. If I had to handicap the odds, I’d give the advantage to Best Buy in the short run but bet on Amazon for the long haul.
I agree Ryan, at least to the extent that the need for in-home consultation is based on technological savvy. But I think there is also a “designer element” to setting up an IoT-enabled home that really optimizes the experience. It’s more than just knowing how to operate the elements sometimes. For example, we are setting up a new home at the moment. We need blinds. We know how to operate blinds. I know how to install blinds. But we still had a parade of Hunter Douglas et al reps through the house before settling on a solution. If you just want Alexa to dim the lights that’s one thing. But getting a true smart home setup going is as much art as science with all the options available.
Smart home devices are the way of the future and, at least until the general public becomes familiar with how to set them up and use them, providing in-home consultation and services is very smart. This type of assistance is also excellent customer service and will be very successful. The program fits the Best Buy model very well. Best Buy is better positioned to help than Amazon, especially because the customer can come into the Best Buy store to see the product before making the purchase and can arrange for an in-home consultation and set up. I don’t see this as remaining long-term but certainly lasting a few years until we all become as comfortable with figuring out how to use a smart home device as we have with a new smartphone.
If Ron Johnson (ex-Target and J.C. Penney) can make his company Enjoy a success, I would expect that company to be an early player along with Best Buy and Amazon in this area, but arguably with better techs based on the promise of Enjoy. There are no pure IoT brands at the company yet, but watch it in the months ahead.
This is a creative idea that could become an important driver for the demand of smart home devices. The variety and complexity of smart home devices available is quickly outpacing what many consumers can fully comprehend. Having experts visiting your home to explain what’s possible and how it can be used/applied in your own home would be very beneficial for those consumers who are interested, but are either intimidated by the technology and choices or simply want a professional opinion on what might be possible. That said, it still may take some years for this to fully develop as in-home devices, while developing fast, are still in their infancy.
While it’s clear Amazon can exert its presence in any market it chooses, I give Best Buy the edge given its base of stores and personnel already in-market — it’s an extension of the Geek Squad, something Best Buy has done well with.
Visiting home-device consultants will be successful to the extent that the products, or the total sales, exceed a certain amount of money. Otherwise it is an expensive proposition. To deploy someone to sell and install just one $100 Echo may not be cost-effective compared to a $5,000 surround-sound system of old.
Amazon is already stocking and selling Echo in Whole Foods next to the bananas! Best Buy is investing in knowledgeable consultants that may rival the size of the Geek Squad. Best Buy has the current advantage as it has a physical store infrastructure to leverage as a local base of operations. Amazon has Whole Foods and rest assured that this is not the last of Amazon’s acquisitions in the physical world. Whole Foods is only the first salvo. The biggest hurdles for smart home initiatives are security and privacy. You can assume neither exists when you invite these devices into your home!
The major problem with smart home devices right now is interoperability … different devices from different brands are simply too hard for the average consumer to connect. In-home consultation could be a major way to overcome this obstacle. No one wants to spend an entire weekend trying to figure how to fix Wi-Fi dead spots and connect devices.
In-home consultation also helps solve the other aspect of consumers being able to see and experience the value of smart devices in their own home in ways that fit their lifestyle.
Rightfully, customers are concerned about privacy and security. If home consultants can address those issues with consumers this kind of service will be a winner.
Finally, there is life time value in home consultation for the providers. Smart home devices and networks need maintenance and upgrades. Customers are most likely to sign up with the company that has the consultant who makes it all work.
In fact, the home consultant is the cornerstone to the lucrative opportunity of leasing smart home devices and networks on a subscription basis.
Funny about that. I just installed a camera system in my home and I did require a consultation before it was done. In retrospect, I should have done more of my own research, as there are some features missing from the system the consultant picked, but I definitely needed something!
So yes, depending in the item, a consultation will be useful: Where should it go? Will the signal reach the router? Etc.
I agree with Ryan. Initially in-home demonstrations may be necessary to drive IoT purchases by some demographic groups but, over time, as more people use these devices they will sell themselves. One big “if” is security. If IoT product manufacturers don’t take steps to make their devices more secure, one big data breech could bring down this nascent industry.
What I like best about this model is that it has the shopper at the heart of it. Personalized assistance and solutions for smart home tech … sign me and all my Boomer friends up too!
For smart home products to succeed, in-home help is an absolute must. The inter-device communication is incredibly fickle and sensitive — highly dependent on your home layout … even including where you put it relative to your microwave.
That said, the problem is far deeper than “educate and recommend.” That is, in fact, the simpler process. Where the sale gets way off track is that smart home manufacturers want to offer any/all devices that communicate. That raises a nearly infinite number of ways that a system can fail. And when it fails, only the absolutely smartest tech-savvy consumers can make things work.
Best Buy’s approach seems believable and reasonably good. But they’ll need to educate their team to the level of Apple’s in-store experts and that will take a long time. Amazon’s effort seems a bit like a headline grabber — at least because I haven’t been able to find any details that indicate they understand the true problem.
It makes sense to do this, especially in the early days of smart technology when consumers want to understand how it works and, more importantly, what it can do for them. In some ways, this is no different than the services offered by Container Store with its Contained Home Service, or Williams-Sonoma with its variety of at-home interior design consultations.
As for Amazon versus Best Buy, it’s a toss-up and there’s likely room for both. That said, Amazon clearly has an interest in selling you Amazon systems while Best Buy will be more agnostic.
I am a bit amazed at how adept most of us are at figuring out today’s consumer technologies without the help of experts. We all can easily remember when our VCRs had the “12:00” time flashing on the screen perpetually. So I think we’ve come a long way as an educated public. Can retailers and service organizations and even manufacturers offer in-home advisory services? Of course. And there is a definite market for that, as there are organizations providing these services today. It is one more way for retailers to differentiate, by the way.
Demonstrating smart home devices in consumers’ homes will bring the products to life. While some smart home devices can be demonstrated in the store, some will be more impactful if consumers can test-drive them in their home.
Best Buy has a strong network of existing stores and staff that can serve as a home base for a team of home consultants with easy access to inventory of products. Theoretically they are probably better positioned to roll out home consultant services. However, Amazon has made it abundantly clear that they want to “own the home.” And we all, know that we can’t underestimate Amazon! Brick-and-mortar retailers have an opportunity to make their stores more relevant by reinventing them to be not just a retail outlet but a center of excellence for in-home sales and service. Retailers need to think creatively about how to leverage their real estate.
I love the idea of in-home demonstrations to sell “smart” products. I think it’s especially useful for less tech-savvy Boomers (example: me) and late adopters. Speaking from my own experience, I recently shopped the smart home section at my local Best Buy store after being intrigued by a neighbor’s Amazon Echo. It’s a case of somebody telling you what you need before you realize that you need it.
That being said, Best Buy would also be smart to step up its game inside its stores — there is a distinct lack of salesmanship (or product assistance) in this section, from what I’ve seen, even though it represents a big volume opportunity.
There are many different smart home device providers out there (with more to come and some to die off) and many consumers won’t want to spend the time or effort to figure out how everything is pieced together. Plus, one might not consider all of the possibilities if you don’t know what all exists. Although I have put together my own smart home and integrated many different elements, I actually enjoy that type of thing. In-home consultations, at least in the early days of these devices, will be important but as time goes on they will become less needed except in more complex setups. This should be paired with in-store help that also understands how these devices work and properly displays them.
Two facts are often overlooked with smart home devices. One, it isn’t new: specialized, “customer electronics installers” have been around for years who exclusively sold systems (think Crestron, Control 4) typically built around whole home audio and security with a little bit of home automation added in. Over the years this technology improved significantly, but so did the complexity, and the price!
Second: despite devices and tech like the Echo, Apple’s Home Kit, etc., it’s still complicated for most consumers to figure out how to install and use these systems without professional expert help. What’s really new in smart home technology is that the price points have finally come down to where a large number of consumers can afford it, and the systems themselves have reduced the complexity to the point that consumers could do it themselves with the right kind of expert help — just not as much as in the “old days.”
What Amazon and Best Buy are doing now is a great way to reduce friction in getting these devices adopted by more consumers and into their homes. Both companies have a place in this space. I don’t think one will overshadow the other anytime soon, but as the technology continues to become even easier to use and install, the need for these services will slowly fade away — especially for younger consumers.
I just had my first in-home smart home survey performed by Maplin, a UK tech retailer which is leading the way on smart homes. It was a very helpful experience. The crux of it is this: Wanting smart home products is not about being a tech geek. It is about linking technology to powerful values, such as peace of mind in your home, protection of your family and your goods — as well as lifestyle factors like comfort, energy-saving and just being cool. People are prepared to open their homes to achieve these goals. This is therefore a golden opportunity for retailers to get invited in. The Maplin offering included seven separate set-up/service opportunities. After that, the secret is to get into an ongoing revenue stream, such as maintenance of the smart home.