There’s lots of new e-commerce opportunity in helping older people stay at home, and GreatCall is an early leader in the space.

There’s a pretty straightforward reason Best Buy Inc. is acquiring GreatCall Inc., a San Diego provider of cell phone and related digital home healthcare services to seniors. There’s lots of new e-commerce opportunity in helping older people stay at home, and GreatCall is an early leader in the space.

Minneapolis-based Best Buy announced yesterday it will acquire GreatCall in a deal valued at $800 million. The deal for Great Call, which says it generates annual revenue of $300 million, is expected to close by the end of Best Buy fiscal 2019 third quarter, or the end of October.

GreatCall will add to Best Buy’s growing e-commerce business. The retail chain’s online sales grew nearly 25% to $6.0 billion for the 2018 fiscal year ended Feb. 3 compared with $4.80 billion in the previous year. E-commerce accounted for nearly 16% of total sales of $38.66 billion.

The deal to acquire GreatCall will help Best Buy provide more digital health services to the homes of seniors, which GreatCall estimates to be a $9 billion market.

Approximately 50 million Americans are 65 or older, and that number is expected to grow more than 50% within the next 20 years, says Best Buy.

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Consumer electronics retailer Best Buy Inc. isn’t a name usually associated with healthcare. But it began changing that perception last October with the launch of a new digital health and wellness program aimed at senior citizens in the United States, 90% of whom want to stay in their home and live on their own as long as possible, says Best Buy.  At a recent investor’s day presentation Best Buy executives discussed a new corporate strategy called Best Buy 2020 that includes Assured Living, a program aimed at using the mobile web, sensors and other digital or smart home healthcare technology to help adult children or caregivers remotely check in on the health and safety of aging residents at home.

As part of that program, Best Buy aims to sell seniors online and in its network of more than 1,000 stores an array of smart home devices that can range from in-home web cameras to sensors that can be installed throughout an elderly person’s home. Best Buy also will offer an installation program and monthly monitoring service that can be used by seniors’ adult children or other caregivers. Best Buy will sell an entry-level package of digital home health gear for about $400, install it for $199 and provide a monthly monitoring service for $29.

The program is being piloted in Denver and Minneapolis, and Best Buy has yet to announce whether it plans a full-scale rollout. “The idea for Assured Living was born in response to customers who came into our stores looking for smart home technology to help keep tabs on their aging parents,” says Best Buy vice president of strategic growth office AJ McDougall.  “We looked at several options, and we felt strongly that we didn’t want to use wearable devices or cameras—we want our elders to feel very independent.”

With the Assured Living program, caregivers can track the data sensors collect on aging seniors using an online dashboard or mobile app. Those monitoring seniors can also sign up to receive customized notifications via an app, a text or by email. The sensors can show whether an aging person opened the medicine cabinet or refrigerator that day, and her quality of sleep and activity levels, says Best Buy. Over time, the Assured Living system also can learn the individual’s daily routines, so it can notify caregivers of abnormal activity, says Best Buy. The GreatCall acquisition gives Best Buy a new platform to expand its Assured Living program. GreatCall has a base of 900,000 subscribers using the company’s suite of digital products and services which include mobile devices, cellular service, mobile apps and a wearable device.

The deal also paves the way for Best Buy to develop more digital health services for seniors with GreatCall, which was founded in 2006 and built its business plan selling Jitterbug, a cell phone for seniors with a touchpad featuring oversized letters and numbers. The company also offered mobile phone plans at $25 per month on the Verizon cellular network.

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But in the last two years GreatCall has been diversifying into additional digital services through acquisition and internal business development. In December 2016, GreatCall acquired HealthSense, a provider of remote monitoring services for seniors, for an undisclosed sum. Also in 2016, GreatCall added new monitoring features such as automatic fall notification to a call center for Lively, a wrist or neck wearable device GreatCall sells for about $50 along with service plans beginning at $19.99 per month.

When the acquisition closes, GreatCall will maintain its San Diego headquarters, as well as call centers in in Carlsbad, Calif., and Reno, Nev. GreatCall CEO David Inns, who has been with the company since its start, will remain as the top executive, Best Buy says.

The acquisition of GreatCall represents the second time the company has been sold in as many years. In June 2017 investment banking and private equity firm Golder Thoma & Co. acquired GreatCall for an undisclosed sum,

But the new deal to sell to Best Buy, a chain retailer with a network of about 1,000 stores and a growing e-commerce business, opens the door to expansion for both companies, says Best Buy CEO Hubert Joly. “We have a great opportunity to serve the needs of these (senior) customers by combining GreatCall’s expertise with BestBuy’s unique merchandising, marketing, sales and services capabilities,” Joly says. “We look forward to the opportunities we have in the health space and the strengths we can bring to bear in this area, especially our experience with technology and serving customers in their home.”

By diversifying its range of product and services, Best Buy can improve its competitive position versus Amazon.com Inc. and fight to remain viable chain at a time when many bricks-and-mortar retailers are shrinking or going out of business, say retail industry analysts.

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“Best Buy’s acquisition of GreatCall will allow the company to continue to expand and broaden its services and deepen its customer relationships with a massive and growing segment of the U.S population,” says Moody’s lead retail analyst Charlie O’Shea. “The $800 million price tag can easily be covered out of existing cash balances and operating cash flow, and we view this transaction as a long-term investment, with short-term profitability a secondary consideration.”

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