Amazon Goes Local With Home Services

Last week Amazon announced its entry into Home Services with more than 2 million service offerings over 700 professional service categories. The marketplace allows consumers to schedule local service professionals while providing “Happiness Guarantees,” upfront pricing, and verified reviews. Initially the platform provides coverage in New York, Los Angeles, San Francisco, and Seattle, but look for coast-to-coast coverage as Amazon invites and vets service professionals in additional geographies.

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It should be noted that many of the features provided (e.g., reviews) are not new concepts, but given Amazon’s more than 20 years’ experience with product marketplaces, we should certainly sit up and take notice. Interestingly, tactics like service guarantees, which SuperPages had pioneered in 2010, have recently been discontinued by Dex Media on February 2 of this year.

Unlike the traditional service directories and IYPs however, Amazon will handle all payment processing and customer payment issues similar to how Groupon works with local merchants.

I would expect Amazon could quickly jump to coast-to-coast coverage by including national brands that provide home services like Sears, Service Master, and a host of other home service franchise organizations in the marketplace.

The local market is not a new aspiration of Amazon. I was approached by a forward-thinking product manager from Amazon way back in 2003 to conduct a pilot project that aggregated national brands that market locally as part of their initial A9 search engine offering. A9 has since morphed into a product, visual, and cloud search platform to serve advertisers and tech teams to run search infrastructure.

Home services have always been a highly fragmented market, with literally hundreds of thousands of providers across hundreds of categories; from plumbers to electricians to handyman services. My favorite “hard to find” category offered by Amazon Home Services is a “Goat Grazing Service.”

Challenges

While Amazon has a long history of providing product marketplaces for consumers with many pioneered e-commerce innovations like 1-ClickShoping and personalized recommendations, there is one undying reality of local SMBs. Local SMBs, including services providers, do not line up to “buy” advertising and lead generation services off self-service platforms. Instead, they are typical “sold” ad and lead products by local premise sales reps, call center sales reps, or agency intermediaries. To understand the different models, consider that Yelp for example has only a total of 84,000 advertisers (2014 10K Filing) after being in business since 2004. By contrast, Groupon, which has a much larger sales force, has 950,000 advertisers (Groupon 10K Slides). It will be important for Amazon to develop outreach sales to attract and retain local service providers outside the highly digitally developed markets of California and New York.

The Amazon Home Services marketplace signals that Amazon is now firmly targeting the local market and puts it in competition with the likes of Groupon, Yelp, Angie’s List, and a host of local Internet Yellow Pages (IYP) directories. By providing vetting and a service guarantee on all purchased services, Amazon hopes to become the trusted booking and payment source for local service providers.

For local services providers, Amazon’s lead generation services and customer payment handling, could greatly help simplify the task of finding and booking new customers. For branded service providers and locals alike, it would be beneficial to explore a relationship with Amazon, as more than 85 million Amazon customers shop for products that require professional service or installation, per Amazon internal data. Now that is a whole lot of grazing for those goats.

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