Earlier this week, Amazon launched its widely-anticipated Home Services marketplace where you can book plumbers, painters and other professionals. The move thrusts the ecommerce giant squarely into competition with a mass of well-funded startups seeking to redefine the way we buy services, creating optimism, skepticism and fear within one of the fastest growing sectors in the tech industry.
We caught up with a handful of small business experts to breakdown the news and handicap Amazon’s chances of transitioning its dominant position in ecommerce to a complex and scattered service landscape.
Eric Grooves, CEO at Alignable:
Amazon Home Services’ approach is to treat service providers like a “product,” with certain features fitting into neat categories. They need to remember the human element plays a big role in choosing a service provider. That’s why word-of-mouth has always been the go-to way that people find plumbers, electricians, and the like. A referral from someone you know who has worked with a particular service provider is a critical element and needs to be emphasized if Amazon is going to be successful. Applying an algorithm and using background checks aren’t going to reveal a provider’s true reputation in their local community.
Josh McCarter, CEO at Booker:
At a high level, it’s very positive. The more that services are discoverable and purchasable online that’s going to be a broad benefit to the entire services economy. Amazon has a huge brand, millions of customers, and it looks like the way they were starting out selling services that were complementary to products they sold: if you wanted a TV, you could get it hung. That’s a pretty logical way for them to compete with Best Buy and GeekSquad. Now, seeing they’re adding other services, the goal appears to be leveraging their customer base — and with their willingness to invest in a multi-year strategy it makes them a very credible provider in that space.
What will be interesting to see what happens to their strategy over time whether they go direct to providers [such as TaskRabbit] or create some kind of marketplace where providers are bidding on customer demand. I could see Amazon either subbing leads out to the highest bidder or just going with a democratic model where everyone gets a fair shake.
Tom Caporaso, CEO at Clarus Marketing:
The biggest opportunity for Amazon is the chance to enter a $630 billion market that’s a natural complement to its own marketplace — while enhancing its customers’ brand experience at the same time. This move helps fix a common pain point for millions of its customers: Trying to find a qualified professional to put together and/or install something they’ve just purchased. The Amazon brand also brings a lot to both sides of the transaction. Consumers will have immediate access to reviews and be more likely to trust the service providers from the start, and the providers will benefit from access to the vast Amazon audience.
Amazon still faces a number of challenges, though. For one thing, this was a huge market even before Amazon joined it, so there are a lot of well-known companies already providing this service — from Angie’s List and Yelp to Home Depot, Lowe’s, and more. And while Amazon will probably find plenty of providers willing to fill its roster in the larger cities and suburbs, that could prove more difficult in less populated towns.
There’s also the question of whether providers will want to go through the Amazon process. As third-party sellers know, working with Amazon tends to drive prices down. Will qualified professionals be willing to accept that trade-off in return for expanding their audience of potential clients? And how will competitors respond to this move, particularly those that participate in the Amazon Marketplace?
Matt Ehrlichman, CEO at Porch.com:
There is a lot of innovation happening in the home services space right now, which is great for homeowners. It makes sense for Amazon to offer this service to their customers. For example, if you are buying furniture, why not offer assembly along with it. Homeowners come to Porch to find the best professionals. That is why we focus our innovation on creating a transparent and inclusive network so homeowners can truly see who their neighbors have used and loved.
Steven Jacobs is Street Fight’s deputy editor.