Amazon expands in US home repair market
Seattle trial expands to NYC and LA
Amazon services offering
Amazon services offering
 
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Reuters
The world's largest online retailer, US-based Amazon, is expanding a trial program which enables customers to order home improvement services via its website.

The trial began in 2012 in Seattle, Washington state, where Amazon is based. It has now expanded to the two largest US cities, New York and Los Angeles.

On its web page for what Amazon describes as "Local Services", the retailer describes the services offered as follows:
Add a service to your cart and check out. Within one business day, the service professional will contact you to set an appointment. If the service is at your home, the service provider will contact you 24 hours prior to the appointment to confirm and 30 minutes before arrival. All services provided in-home require someone 18 years or older to be present during the entire appointment.

Behind the scenes, Amazon will take a 20% commission for services which are booked via its website costing under US$1000, and a 15% commission on services costing over US$1000.

The US home repair market is estimated to be worth US$400 billion a year. Amazon estimates that its customers are already spending around US$22 billion a year in off-line purchases. Services are simply added to the familiar Amazon shopping cart, and processed in the same way as any other order.
Difficult market

Other US services have attempted to enter this arena with mixed, but mostly disappointing results. Providers such as Angie's List, for example, have failed to deliver expected profits, weighed down by high marketing costs associate with convincing enough small repair and maintenance businesses to sign up as members of the service. This has led analysts such as Black Harper of Wunderlich Securities to shift the stock from a "buy" to a "hold".

Mr Harper has some doubts as to whether Amazon will be able to do better than Angie's List in this market. He is quoted by Reuters as having stated in a research note from 11 June 2014:
While the company has impressive logistical capabilities, it is lacking the local business information, reviews, and sales force, among other attributes, to begin to compete in the market. We have a healthy respect for Amazon's ruthless competitive nature, but expect the local market to be much more difficult for them to scale than the e-commerce business.

However, early results from businesses that did sign on with Amazon during its Seattle-based trial, show promise. The owner of one plumbing company stated that he had nearly 100 jobs sourced from Amazon referred to his firm.

Amazon does have three advantages in this market. First, many people in the US are buying the very systems that require installation directly from Amazon, so the company can easily add-on the services to the product.

Second, Amazon is backing up the services with a complete and comprehensive warranty. It runs annual background checks on the companies that sign up,, and there is a careful screening service. Given Amazon's reputation for quality customer service, it might seem a safe choice for services by customers wary of being "ripped off" by home services providers.

Amazon's third advantage is its well-tested review system. The company is banking on reviews of home repair and maintenance services providing a unique point of difference from other internet-based businesses in this area.

While difficulties abound, Amazon is also tackling even more difficult markets, such as daily deliveries of fresh grocery produce, a project that has also recently expanded beyond its Seattle and San Francisco trials to other major US cities.
Reuters
Wesfarmers CEO Richard Goyder (Image credit: AAP)
Amazon is biggest threat: Wesfarmers
Wesfarmers CEO Richard Goyder believes Amazon is the biggest threat to his company. He told the National Press Club in Canberra that it's not Woolworths or Big W that comes to mind when he thinks about his biggest competitor. He said: "I think Amazon is the biggest threat we've got to our business model at the moment. [Amazon is] a $150 billion company that finds its competitive advantage through cheap labour, low tax and highly innovative supply chains." Goyder, who recently chaired the Sydney meeting of the B20 meeting - the business arm of the G20 (a forum for the governments and central bank governors from 20 major economies) that is under Australian presidency in 2014 - also wants a level playing field. He said the B20 supports the G20's efforts to combat profit-shifting that is employed by big international companies like Amazon.
Tue, 5 Aug 2014 | 05:07
Pro.com has attracted US$14 million in fresh venture capital funding
Increased investment in Pro.com
Pro.com, the Seattle startup that can make it easier to find home improvement specialists, from plumbers and electricians to roofers and landscapers, has attracted US$14 million in fresh funding from venture capital firms Madrona Venture Group and Maveron. The funding follows a US$3.5 million round that Pro.com announced in May, which included participation from Amazon.com founder Jeff Bezos, Sherpa Ventures and Andreessen Horowitz. Pro.com is led by Matt Williams who sold another startup LiveBid to Amazon.com in 1999. Porch.com is touting a new way for home owners to find home improvement professionals online. The company said that over US$140 million worth of home improvement projects have flowed through the site in the past few months. It will use the fresh funding to continue to grow its national customer base and add more home service professionals to its marketplace.
Sat, 4 Oct 2014 | 03:26
Amazon launches local services
On Amazon now you can add tradies to shopping cart
US publication The Wall Street Journal (WSJ) is reporting that US online retailer Amazon has added "handymen" to the long list of items and services it provides.

Shoppers in a number of US cities will beexposed to the tradie offer after purchasing items, such as ceiling fans, that may require installations services. The installation businesses will be able to have their own product pages on Amazon, as well as a way for customers to book a time for a service.
Tue, 25 Nov 2014 | 05:33


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