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Geek Squad tie pin

Glen Stubbe, Star Tribune

Best Buy dispatches Geek Squad to eBay

  • Article by: CHRIS BURRITT
  • Bloomberg News
  • October 5, 2012 - 8:01 PM

GREENSBORO, N.C. - The Geek Squad is going where no geek has gone before.

Best Buy's tech-support service is expanding to eBay and conducting trials at some Target stores as the world's largest consumer-electronics retailer seeks new revenue from fixing computers and tablets.

EBay recently added around-the-clock Geek Squad support with service plans costing $29.99 for three months and $49.99 for six months, said Gregory Boutte, vice president of eBay electronics and motors in North America. Best Buy also is rolling out the Geek Squad at 28 Target stores in Denver and one in Minneapolis.

The hook-ups with eBay and Target are testament to the enduring appeal of the Geek Squad. In fact, the army of 20,000 black-tied, white-shirted agents is the struggling electronics chain's best-known brand and the vehicle driving its services push, said George Sherman, senior vice president of Best Buy's services business group.

Expanding the Geek Squad "fits with their strategy to deliver a connected experience to consumers," said Stephen Baker, an analyst at NPD Group, a Port Washington, N.Y.- based research firm. "They're trying to make Geek Squad a ubiquitous, stand-alone brand that stands for great help around your technical problems."

Customer service is a big part of Best Buy's plan to revive slumping sales and fend off rivals such as Amazon.com. Hubert Joly, who took over as CEO a month ago, is giving employees more training so they can help shoppers connect their gadgets, generating higher fees from service contracts and warranties. Best Buy boosted U.S. revenue from services 6 percent in the quarter ended Aug. 4 as comparable-store sales sank 3.2 percent, the eighth decline in the past nine quarters.

The company also is closing 50 big-box stores and accelerating the opening of smaller shops that sell mobile phones, e-readers and tablets. Those categories increased sales last quarter while television and computer purchases fell.

The strategy still has a ways to go. Analysts project Best Buy's revenue will fall 2.9 percent to $49.2 billion this year, while Amazon's sales are estimated to gain 31 percent to $62.8 billion.

The competition has weighed on Best Buy's stock. The shares have declined in three of the past four years and now trade at a 78 percent discount to the Standard & Poor's 500 retailing index on a price-to-earnings basis.

Best Buy fell 2 percent to close Friday at $18.03. The shares have tumbled 23 percent this year.

Geek Squad was founded 18 years ago by Robert Stephens, who rode around Minneapolis on his bicycle, helping people with technology problems. He sold the company to Best Buy in 2002, when he had 65 agents. He still serves as a consultant to the retailer.

Establishing credibility

Early on, the Geek Squad was criticized by Best Buy executives upset that it was recommending and repairing Dell Inc. computers when the retailer wasn't yet selling the brand. Stephens, 43, said he found allies in founder and Chairman Richard Schulze and CEO Brad Anderson, who fended off the complaints.

"I was adamant saying that a Geek Squad agent should always be comfortable to recommend what is the best," Stephens said in an interview. "The minute that gets called into question, Geek Squad is going to lose value and trust."

The same type of competitive tensions may arise as Geek Squad expands beyond Best Buy, Stephens said.

"Target is probably not interested in having Geek Squad refer business to Best Buy away from Target's electronics sales," he said in a telephone interview.

In April, the Geek Squad began helping members of AARP, an organization for people 50 years and older, with a program costing $169.99 a year. In July, the unit hooked up with Verizon Communications Inc. to help small and mid-sized businesses.

The Target deal offers Best Buy a way to reach more women. The "vast majority" of the discounter's female customers don't regularly visit Best Buy, Sherman said.

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