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 Amazon aims to gauge demand and test logistics before rolling out
nationwide, mirroring its approach to its grocery delivery service,
Amazon Fresh. Fresh was tested in Seattle for years before expanding
to San Francisco and Los Angeles last year.
The move takes direct aim at consumer review sites Yelp Inc and
Angie's List Inc as well as U.S. home improvement chains Home Depot
Inc and Lowe's Companies Inc, which have both invested in ways to
link customers with local plumbers, painters and other service
providers.
Amazon declined to comment.
Services marks a new frontier for Amazon, which has focused on
selling products as it expanded from books into consumer goods,
groceries and media. Local services are massive and growing, but it
has been tough for marketplace companies to turn a profit, since
offerings must be tailored to each city or region.
In recent months, Amazon has reached out directly to service
companies as well as to several startups in Seattle and San
Francisco that already connect service providers, from home repair
to massages, to customers through their own web sites and mobile
applications, according to the people.
Amazon has also been experimenting with ways to tie services to the
products it sells. In one example, Amazon recently ran a test on its
website offering installation services to users who bought Nest
thermostats.
The moves reflects Amazon's long-running efforts to have services
tied to every product sold by Amazon on its website, according to
one person close to the company, who like others declined to be
named discussing confidential plans.
BACKED BY AMAZON
A local services marketplace would extend Amazon's role as a
middleman for third-party vendors, which account for about 40
percent of Amazon's sales.
The quality of the local services would be backed by Amazon's
"A-to-z Guarantee" which the company uses to vouch for items sold by
third-party sellers on its website, the sources said.
One of the companies Amazon contacted in January was San
Francisco-based Thumbtack, a startup that serves as a matchmaker
between consumers and 63,000 service providers including
photographers, tutors and others.
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In its conversations with Thumbtack, Amazon asked several questions
about the company's growth strategy and the market for local
services, according to a person familiar with the conversation.
Thumbtack, which has raised $49 million from investors including
Sequoia Capital and Tiger Global Management, said the average
project on its site is $600. It drives an estimated $1.8 billion
worth of business annually to professionals on the site.
Other industry observers estimate that the home repair and
improvement market alone represents an at least $250 billion
opportunity.
Angie’s List in 2011 estimated that the market for local services
was around $400 billion, including remodeling services and pest
control. But since going public that year, the company has had just
two profitable quarters.
Amazon itself has had limited success with Amazon Local, a daily
deals service. Amazon Local has no involvement in the services
marketplace currently in development.
But the business opportunity may be improving, in part by the
proliferation of smart phones, which let service providers schedule
appointments on the fly.
Offering local services on Amazon’s website has been a goal of Chief
Executive Jeff Bezos for years. He personally invested in Pro.com, a
Seattle-based startup, founded by former Amazon executive Matt
Williams, which helps customers find contractors and estimate the
costs of home repair and improvement projects.
(Editing by Peter Henderson)
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