Amazon: It's Not The Drones That Should Worry You

[Jonathan Trivers]This is a very bad sign. Some time ago, Jeff Bezos, founder and CEO of Amazon, invested in Pro.com which helps home owners find, book and schedule home improvement professionals. Pro.com is based in Seattle near Amazon’s South Lake Union headquarters.

And it goes beyond that. Amazon is preparing to launch a local marketplace that could compete with Angie’s List, Home Advisor and even Home Depot and Lowe’s. Reuters News reported about five months ago that the marketplace could encompass anything from babysitters to handymen and we assume small contractors like carpet installers, wood re-finishers, ceramic tile contractors, etc.

How this will work is not clear. Certainly this will be more than Yelp or Angie’s List. If Amazon is able to drive customers to local businesses (think flooring installer) they would find willing small contractors, plumbers, electricians and all type of flooring installers. (There is at last count about 28,000 independent carpet, vinyl, wood and ceramic tile installers. None of these are employees of retailers – that is a much smaller number and they would not participate in this.)

Services are a new frontier for Amazon. It has built an astounding business model directed at selling almost anything (even testing grocery delivery in large metropolitan markets) with extraordinary service/delivery excellence and an "A to Z Guarantee" which the company uses to vouch for items sold by third-party sellers.

There is one wrinkle in its approach to local marketplace. Amazon has also been experimenting with ways to tie services to the products it sells. Amazon recently ran a test on its website offering installation services to users who bought the Nest Learning thermostats. This is no ordinary house thermostat as its cost is more than $200. Folks told Reuters that Amazon has had a long-running effort to offer services tied to every product sold. 

Local services are a very large business component. Angie’s List estimated in 2011 that the market for local services was around $400 billion. Some believe the home repair and home improvement segment of that market is as high as $250 billion in annual sales. And we are only talking about the "labor" component of this sector.

Heretofore flooring was not a category Amazon had shown much interest. But that could change very fast. It is a perfect product for Amazon’s drive to match product with professional installation. And doubt there are flooring installers that would want to participate in this program. Probably even retailers.

Home Advisor’s (homeadvisor.com) business matches "aligned" contractors with all sorts of home improvement and repair business. They offer to match your needs for wood, carpet, laminate and ceramic tile jobs.  And they say they have installers in my small town up in the mountains.

Home Advisor declares on its website that it has helped 25 million homeowners. Imagine what Amazon could or would do. Both would take sales from flooring retailers and feed independent flooring contractors leads. This is where the battle will be joined for flooring customers. 

Source: www.floorcoveringweekly.com (published on rd Nov 2014)