Lots of companies want to help local service businesses get leads that turn into customers. Google, Yelp, Facebook…they are all in the business of selling leads.
But Amazon, more than any of these companies has a better brand image with consumers and massive direct web traffic. So when Amazon starts selling local services, pay attention because its going to be big.
Yes, there are lots of competitors in this market: Angies’ List, Thumbtack, Handy and many others all want to compete in this space but Amazon has a natural advantage. In a marketplace (which is what all of these companies are trying to be), the hardest and most expensive part of building the business is generating traffic. With the exception of Amazon, all of the other competitors in this space rely on Google which has its own thoughts on being a marketplace. Amazon, on the other hand, has traffic and a consumer brand image that will be very difficult to beat.
One of the striking things about this announcement is that the pricing is reasonable for new customer capture – 20% for transactions up to $1,000. Most local services businesses would take that business as fast as Amazon is willing to sell it to them.
Yeah…that is what book sellers thought 10 years ago too.
The way this game gets played is that Amazon will take 20% but businesses will be competing on price. The true cost of capturing a job on Amazon will be much more expensive that 20% because, as the marketplace gains volume, businesses will be willing to offer lower and lower prices. They will make most of their profits on repeat business.