Amazon Versus Angie?
Amazon Local Services debuted recently, allowing customers to purchase contractor services for setup, installation, and repair work. In contrast to the huge noises it makes about smartphones, tablets and Kindle ebook readers, Amazon has been quite circumspect about easing into the local service professional business, which puts them in direct competition with Angie's List and other players. Read on for the full story...
Amazon Wants to Sell Plumbers Now
Everyone knows you can buy books -- in both physical and digital form at Amazon.com. Over the years, they expanded into electronic gadgets like the Kindle, and the Fire lineup that includes smartphones, tablets and a streaming video stick. And now, you can buy almost anything at the online behemoth.
So why not plumbers, electricians and painters? Or perhaps even an Amazon-approved accountant? Amazon crushed the brick-and-mortar bookstore industry; will they also kill competing services like Yelp and Angie's List, which offer reviews and referrals to local service professionals? (And will they offer Free 2-Day Delivery of overall-clad plumbers, or will those guys still need their own trucks?)
Today, only Amazon customers in Los Angeles, New York, and Seattle will see offers from contractors, and only when they are shopping for goods that require such contractors’ services. There isn’t actually a category for “plumbers,” for instance. Even Amazon’s library of daily press releases – which includes announcements of executives’ retirements – don’t mention Local Services.
Such caution is a good idea when venturing into the shark-infested waters of local contractor services. As most homeowners know, fly-by-night operators and outright scammers are fairly common. For Amazon to put its reputation and legal liability on the line is a big risk, and taking it slowly is surely the best strategy.
But Amazon does plan to go “all in,” as poker players say. Reports indicate that the company will guarantee customers’ satisfaction with contractors’ work or refund their money! The word is that Amazon contractors must provide proof of professional licenses and/or registrations applicable to them, over $1 million worth of insurance coverage, and a clean background check. That would put Amazon Local Services a clear step ahead of many of its competitors.
Who Can You Trust?
By contrast, Craigslist provides absolutely no information about an advertiser’s reputation. Yelp provides consumer reviews and is widely believed to manipulate those. Staff at Angie’s List will help an aggrieved customer obtain satisfaction. But if the contractor advertises on Angie’s List the customer’s unflattering review is expunged, leaving future customers in the dark. About two-thirds of Angie’s revenue comes from ads, which prompted Consumer Reports to question the reliability of the service.
Amazon may be able to overcome its late start in the local services market by establishing a high standard of customer satisfaction and trust. That will take time, and may cost Amazon quite a bit of money. Sure, Amazon won’t need to buy inventory or build warehouses for service providers, but it will need to spend a lot of labor and cash on recruiting and vetting contractors, and on resolving the disputes that arise inevitably from contracted home improvements.
But the addition of contractor services will fill a large, important gap in Amazon’s e-commerce strategy. Amazon is already huge in physical goods; the services sector is an equally large plum. If Amazon can sell you solar panels, it should be able to sell you installation and maintenance services, plus a local accountant who can help you write it all off your taxes.
It’s no coincidence that Amazon earlier this year introduced a smartphone-based payment card reader similar to those offered by Square, Inc., and Paypal, or that it’s named Amazon Local (cash) Register. Local small businesses are the last frontier for e-commerce. Wooing them takes great effort.
It looks like an interesting road ahead for all players in the professional services review and referral business. Home improvement giants Lowe's and Home Depot also have their own contractor referral services. Google Local wants to connect consumers with local businesses. If Amazon gains traction, some analysts speculate that Google, Yahoo or eBay may enter the fray, or up the ante by acquiring Yelp.
Have you used an online service to hire a contractor or service pro? Tell me about your experience. Post your comment or question below...
This article was posted by Bob Rankin on 16 Dec 2014
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