Handpicked pros, upfront prices and happiness guarantee—Amazon.com AMZN promises all of these with the official launch of its Home Services, a souk for home repairs, installations and much more.
Amazon Home Service
Since June last year, there were rumors about Amazon entering the home-services space. The rumors were proved true when in November, Amazon quietly rolled out a website for its Amazon Local Services.
Amazon Local Services came with the tagline “service made simple”. True to the tagline, it lets customers locate professionals nearby, using their zip code. If a professional is located nearby, customers can peruse prices, fix an appointment and pay via Amazon once the task is completed.
At that time, most of the services were related to installation of physical wares like security cameras, auto parts and garage doors.
The Journal reported that these services were available to customers in New York, Seattle and Los Angeles.
Amazon Home Services is Amazon local services rebranded, refocused and with a wider rollout.
Peter Faricy, vice president for Amazon Marketplace at the launch of Amazon home services said that the website will list 700 different services- “and everything from installing a garbage disposal to renting you a goat herd that will graze away the unwanted vegetation on your property” will be covered. It will now be available in 41 U.S. states instead of just four main metro hubs.
Handpicked Pros
A big part of the sales pitch from Amazon is that they are doing their homework well—and figuring out whom their customers can trust.
“Invited, Vetted and Licensed” is how Amazon describes its handpicked professionals.
Amazon says that all the service providers are added to the company's roster on an invite-only basis. To be an eligible service provider, Amazon requires each contractor to go through a background check and maintain insurance.
According to Amazon, it accepts an average of three out of every 100 service professionals in each metro area.
Upfront Prices
This promise by Amazon deals with speed and transparency. The site claims that it will allow customers to “buy instantly, offer competitive prices and to shop with confidence.”
Amazon’s marketing material claims that it takes 60 seconds to offer any service. Faricy claims that "We have standardized and prepackaged all of our service offerings. So you know exactly what is going to be done and how much it’s going to cost you, upfront, no surprises."
Service professionals of Amazon vie for a customer's business based on price, quality and availability. If customers find a lower price for the same service and professional, Amazon says it will match it.
Customers will be able to add pre-packaged services to their cart with just a few clicks and will be charged when the service is completed.
Amazon will take a percentage of each service fee. Though it does not disclose its share, according to the Verge, “language from the beta version of the website shows Amazon taking 20% on standard services, 15% on custom, and 10% on recurring.”
Happiness Guarantee
The company is also backing all this with "Amazon Happiness Guarantee," which is a money back guarantee if the customer is not satisfied with the end result. Amazon promises to be with its customers till the service is complete.
Also, Amazon assures that the reviews on its sight are genuine, given by real customers.
Competition
With this service, Amazon is entering a market dominated by established players like Yelp Inc. YELP and Angie’s List Inc. ANGI. eBay Inc. EBAY has also been testing the waters with eBay Hire, which connects products sold on the auction website to the profiles of the providers offering related services.
Startups like Thumbtack further increase competition for Amazon. Thumbtack allows consumers to post the jobs that they want done, following which service providers bid to win the assignment.
The Wall Street Journal reported that Amazon expects its money-back guarantee to make it competitive against more-established rivals.
Interestingly, Amazon’s chief executive, Jeff Bezos, is an investor in Pro.com, a Seattle based firm that unites its customers with home-improvement professionals. The startup received an early backing from him and Amazon investor Madrona Ventures Group. It recently completed a $14 million funding round.
Let’s Wait and See
Amazon’s reach and scale are a big advantage for the company. However, Amazon has experience in dealing with products rather than services whereas Yelp and Angie have immense experience in the services field.
According to Sun Trust analyst Robert Peck, Amazon could even try to partner with an already established player like Yelp in the near term in order to improve the quality of its ratings and reviews. He gives the example of GrubHub and OpenTable, noting that both compete with Yelp in the restaurant space but have not matched up to the services offered by the latter.
Amazon’s advantage lies in its access to a large number of customers, which will attract service professionals. Moreover, it has the platform required for customer referrals, which will spur sales for service providers. The first mover advantage of smaller players will likely fade over time. Amazon also has the financial muscle to buy startups if it sees they have niche strengths.
We need to wait and see whether it can make its mark on this turf and compete with the seasoned players.
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