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Approximately 85 million customers buy items from Amazon that require some sort of installation or construction, from large screen televisions to children’s bicycles. If a busy consumer shops on Amazon mainly because of the convenience it offers, is she or he likely to have the time and patience to install the product?

keyboard message About usThe gap implied by this question has led to the emergence of online home services markets. Both Amazon and Google have developed capabilities that allow customers to click a link to receive quotes for services from local professionals. The purchase of a big screen television thus prompts a query about whether the buyer wants someone to hang it on the wall. If the customer expresses interest, the system provides a list of service providers, as well as clear, detailed quotes for the price of the service.

Whereas Amazon’s Home Services marketplace is integrated into its main site, Google is still experimenting with ways to join the competition. It recently invested heavily in Thumbtack, a platform that allows customers to post their jobs, then receive bids for those jobs from service providers that have registered with the site. For Google, this expansion represents an effort to leverage its position as the starting point of so many searches for home service providers. Dog owners who need someone to come by once a day to take Fido for a walk often start by typing their location and “dog walker” into Google’s search engine, but then they likely move on to another site to review the options and solicit service offers. If Google could find a way to be the one-stop-shop for such service transactions, its reach would expand greatly.

Amazon similarly hopes to extend its reach, and it has an advantage in that effort. That is, people already visit the retail site for all manner of products. Amazon believes it can readily convince them to consider it first as a source of services too. Accordingly, it already has a roster of providers offering about 700 types of services to customers, from the conventional to the obscure (just what does a “silk aerialist” do?). Just as it has with products, it will seek to offer the widest selection possible, ensure speedy delivery, and provide highly competitive prices.

For service providers, joining the ranks of Amazon or Google service providers promises both benefits and challenges. Local plumbers, lawn care services, and tile installers are likely to increase their business if they appear on these sites. However, they also face greater price competition, such that they likely need to underbid all their local competitors to earn the customer’s business.

Although other review sites, such as Angie’s List or Yelp, already offer a single source of a range of service provider options, sourcing these purchases from a well-known name in retail offers some added benefits. In particular, people can sign up for a needed service during the very occasion during which they purchase the item; without pausing, they can buy a new stereo system and schedule its installation. In addition, Amazon offers the reassurance of its name and reputation. Consumers can feel safe, knowing that it has registered the service providers on its site. Explaining how she overcame any reservations about buying an experiential service through Amazon, one first-time service buyer noted, “I thought, O.K., Amazon stands behind this.”

Discussion Questions:

  1. What are the advantages of going to Amazon or Google for home services?
  2. What will be the future of home services providers?

SOURCES: Hilary Stout, “Amazon, Google, and More Are Drawn to Home Services Market,” The New York Times, April 12, 2015