Amazon playing to its strengths with listing for plumbers and auto mechanics
Grocery delivery, hotel reservations, talking music speakers, now handyman scheduling — is there any business Amazon (AMZN) isn’t interested in?
There is a method to the madness, though, as Jeff Bezos and company look for ways to leverage more and more of the retailing technologies they originally created to build the e-commerce site.
The latest reports focus on Amazon’s new offering, dubbed “Amazon Local services,” to help consumers find and schedule all manner of in-home and in-store services, everything from plumbers and electricians to auto mechanics and appliance repairmen.
Starting in 15 cities -- including New York City, Miami, Seattle, San Francisco, among others -- local service providers can sign up for a listing with Amazon, paying 15% to 20% of the revenue they earn back to Amazon for the referrals. The fee covers payment processing, online scheduling and other needed bits and pieces to help the service providers list online. Those listed by Amazon don’t pay for referrals or leads, just the commission on fees for services.
Worldwide, such service fees total $400 billion, says Baird Equity analyst Colin Sebastian. That will likely attract other big Internet companies such as Facebook (FB) and Google (GOOGL) to the listings service space, he writes in a report analyzing Amazon’s new service.
“Amazon has the scale and customer relationships to drive meaningful volumes of appointments, in our view,” Sebastian notes.
The first and best known Amazon move to sell access to a service developed internally, of course, was Amazon Web Services, the market-leading provider of cloud hosting. But in building the massive ecommerce site, Amazon has also developed logistics expertise, a payments network, a recommendation engine and a customer review platform.
“Amazon has a habit of building something for themselves and then ‘white labeling’ it and making it available to the rest of the industry,” says Cherian Abraham, a mobile and payments consultant at Experian.
The move to provide services for third parties should aid Amazon as competition intensifies and growth slows in its original e-commerce business.
Still, many of the new services offered to third parties face a difficult challenge. Service providers, particularly other retailers, may be hesitant to trust Amazon as a partner after seeing their track record with prior partners such as Toys R Us or, more recently, book publisher Hachette.
And most of the services, including the new local offering, are aimed at markets that already have successful players. Angie’s List (ANGI) has attracted 3 million consumers, up 25% from a year ago, who pay to subscribe to the service’s listings with over 50,000 tradesmen. Shares of Angie's List lost 3% on Tuesday on news of the new competition from Amazon.
Other companies competing for the business include Yelp (YELP) and Groupon (GRPN), along with private startups such as HomeJoy and Handybook.
