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Is Amazon Taking Over The Home Service Industry?

As if Amazon didn’t have enough products to sell already, they are now in the business of selling services.  That’s right, you can now hire a handyman, or offer your handyman services through Amazon Home Services.

What does this mean for handymen and other service providers?  Should you partner up with the internet giant to grow your business?

In this article, I’m going to explain what Amazon Home Services is and what it means to you –  the service provider.

What is it?

Amazon Home Services is a way for Amazon to provide more value to their existing customers by recommending vetted service providers to them.  They’ll have a list of all kinds of service providers, from handymen, plumbers, and electricians, to dog groomers and goat herders.

How does it work?

The customer has the opportunity to purchase pre-packaged services directly from Amazon.  They can do this by searching for services directly or by being up-sold when they purchase the appropriate products.

Let’s say somebody purchases a TV wall mount bracket, they would then be presented with the opportunity to purchase installation as well.

The service providers are then connected to the customer and schedule the jobs through Amazon’s web interface.  Basically, just like any other lead generation service, the contractor gets a new customer, and Amazon gets a cut of the job.

You don’t pay for leads, you just pay a percentage of each job.

Benefits to the Customer

Customers are always struggling to find good service providers they can trust.  Amazon is eliminating the time and effort by pre-vetting the services which provides convenience to the customer.  Each business will be required to go through a background check, be licensed if required, and have a “good track record” (whatever that means).

Additionally, customers can see the price of the job right there, just like buying any other product on Amazon.  This is huge.  Customers no longer have to call tradesmen and get quotes on their services.   Now they can check prices with just a couple of clicks.

Benefits to the Handyman

  1. You can piggy-back on Amazon’s Trust – As a handyman, you have the opportunity to partner with Amazon, which is a highly trusted company.  This is not only great for getting exposure, but for positioning your business.
  2. Huge potential for generating leads – According to Amazon, 1 in 8 Internet users have been on their website in the last 30 days!  That’s a tremendous amount of traffic which means a ton of potential exposure for you.
  3. Control over pricing – You get to set your own pricing.  I would expect this, but it’s still nice.
  4. Amazon handles the payment processing, freeing you up to just do your job and not worry about talking money.
  5. Target specific areas – You can choose highly targeted zip codes instead of having to service your entire city.

Limitations and Negative Consequences

At first blush, everything looks great because there are some clear benefits to all parties involved.  Customers get the added convenience of easily price shopping for trusted services, service businesses get exposure to customers, and Amazon makes more money.

But, I can’t help but wonder what this will do to the price of handyman services who advertise on Amazon.  Is it going to force handymen to compete on price even more?  I mean, Amazon is certainly a place that is known to attract price shoppers.  As multiple vendors try and compete for the top spot on Amazon, price wars are inevitable, and lower prices always lead to lower quality.

Another potential issue I can see is with the variability of jobs.  With this package price model, you will be forced to provide a price before even knowing what the job looks like.  Or, even worse, you don’t have the opportunity to screen your customers before doing business with them.  Personally, in my own handyman business, I enjoy the freedom of having control over how I handle individual jobs.

What if a customer purchases a $200 wall mount installation and the job ends up being a $1200 wall mount installation?  That’s going to be bad news to the customer when the installer shows up.  I’m interested to see how Amazon is going to mitigate these inevitable issues.

Conclusion

It’s pretty obvious why Amazon would roll out such a program.  They now get to capitalize on the huge market of lead generation and provide a (potentially) better service to their customers.

But, will it change the way us handymen find work?  For some, absolutely.  Those who fail to master their own marketing will have no choice but to rely on these forms of lead generation.  For others, it will simply be another tool in the marketing toolbox that they can utilize when and if it makes sense.

What do you think?

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  • John April 2, 2015

    Of course amazon wants to join the home depot, lowes, angies list, home advisor…to stick their fingers in the cake of the already driven down wages of the blue collar business owner. Just like walmart moving into a small town, driving out the family owned small business owners, claiming they are creating jobs in the community (although minimum wage and part time). Or American manufacturers moving their factories to foreign countries to avoid corporate taxes and to capitalize on impoverished people without any labor laws. We could take our business elsewhere, but can we afford not to do business with these companies? I must admit I hope this backfires on them.

    • Dan Perry April 3, 2015

      Thanks for sharing that perspective, John, and very well put. I wish there was a way for them to help contractors find leads without taking such a huge percentage.

  • Boyd April 2, 2015

    I hope it backfires as well. It will create a lot of upset tradesmen when they have to do a job that loses them money

  • Derek Sanders April 2, 2015

    Hi Dan,
    I don’t think this will hurt independent, good , honest hardworking handy men type people at all, In fact, I think it will help us continue to grow a faithful client base. The reason i say this is because, like anything else, the final product will be how much quality the folks doing this work as a sub-contractor to Amazon or home Depot, or menards or whoever, and how the word of their results gets promoted and passed along, as well as the efficiency and completion of the work, All of that comes into play! Bottom line, if these large corporations send out junk workers, that are not professional, nor timely, nor do what they are paid to do, WHEN they are paid to do it, the game is over. I predict a flop, and a Win going to us that stay the course, and do everything the way we know how, withOUT the help of some one trying to take a piece of our pie.

    just my thoughts, Derek Sanders
    owner Sanders Home Improvements Effingham, Illinois.

    • Dan Perry April 3, 2015

      Thanks for your insight.

      I think you are right on. Those of us that understand marketing and offer a premium service will not be bothered by this at all.

      There is always a market for high quality service. But, I think it’s the guys that already participating in the price wars are gonna feel this one.

  • JohnGrega April 2, 2015

    Amazon charges a flat 20 percent of the total and sends you the difference. So I either raise my rates or make less money. Not sure about this one…

    • Dan Perry April 3, 2015

      Hey John, I think there is a more strategic way to use the service. Here’s what I would do.

      I’d only offer a service that was very simple but is the type of service a higher end client might pay for (like a TV Wall Mount). I would make sure I was making enough to justify the job, but then I would bank on the fact that I would be building my client base and make my money on the return business promoting other services that I offer. Return customers are where the money is for home repairs anyway.

      The key is to not have to rely on it. You’ve still got to implement other marketing methods, too. But, it would work to generate some leads if you were looking to grow.

      • Tara Hills75 April 6, 2015

        I agree with you on this point Dan. Thanks for taking the time to share this new development in the marketplace and highlight some of the benefits and possible drawbacks. I was thinking along the line as you were, to test it like any lead generator. The number will speak for themselves in time. I would seriously consider testing it simply to open another channel of targeted leads in our area, however limit our amazon purchased services to something very specific to offset the potential loss. It’s risky, but with some planning and hedging, it could be a great lead generator for long term clients, referals, etc. I would want to inquire of Amazon if we could include a “price subject to change after we confirm the nature of the work” since this is a SERVICE not a straight product like diapers, books or cat litter (yes, they will ship you cat litter!). I like the idea and think it’s worth exploring like any lead generator. And we would roll the 20% into the flat rate so we don’t actually lose alot of money (if any). We don’t lose money by advertising with them and it would be interesting to see which clients use the service. One thing to note, we aren’t just competing with other handymen, but with other service providers. Our handyman service to do a quick roof repair is significantly less than a flat fee from a roofing company (10 minute job to put on a fallen peice of soffit is $175 from the roofers, only $75 for us). There might be low-balling (low quality) handymen, but there is a huge market of competition without cutting our prices when it comes to quick roofing, plumbing, electrical. 🙂 We landed that exact job over the weekend via a local moms facebook group conversation (someone looking for a roof repair, unhappy with roofers quotes, we were referred with our fb page linked to the post and 24 hours later booked the job over the phone. Client was thrilled, posted the price back on the fb convo and 7 other ladies were following the conversation. Powerful word of mouth advertising those moms on facebook! We love em!)

        • Dan Perry April 6, 2015

          Yes sir, use the tool (Amazon) for what it’s good for and nothing more. And thanks for the tip on Facebook! I’m sure somebody will find that very helpful.

  • Jim Bartlett April 4, 2015

    Dan — I tend to agree with most of the earlier comments. We won’t use this service to buy leads because we’re far better off generating our own demand for services using our own marketing efforts and serving repeat calls from past clients.

    With that approach we continue to grow about 25% annually, and actually have a hard time keeping up with that growth. In the past we’ve tried a few other “lead services” such as HomeAdvisor, ThumbTack, etc., and have found them to be lacking. And those only take a small fee for the “lead” versus Amazon wanting a whopping 20% of gross revenues on jobs they sell for you, which is nuts. I suppose there will be those small operators who desperately need a lead service like this to generate the demand they need….and are willing to give away most of their bottom line to get the help. But for most of us who are savvy business people and know how to effectiveky reach our target audience via our own marketing efforts, we’re far better off doing our own demand generation work and retaining all of our net earnings rather than sharing a good portion with Amazon.

    I love buying products from Amazon, but I only see this foray into services as a few steps down a steep slope to *cost-focused* purchasing of our services by the general public….and that is guaranteed to result in less that optimal quality, because regardless of what you’re buying in the way of services, you typically get what you pay for. And that will degrade the reputation of our industry as a whole.

    The only benefit to us in Amazon’s services play is that OUR clients will know they have the best solution already, so as they observe their friends receiving more and more shoddy work for “cheap” via Amazon, they will increasingly become passionate ambassadors for our company. explaining to their friends and neighbors what OUR difference is, and why it’s worth not buying just based on cost.

    Keep the good posts coming! Thanks!

    • Dan Perry April 6, 2015

      Thanks for sharing that. I think you hit the nail on the head when you mention the importance of being a savvy business owner who knows how to generate his/her own leads. It’s never a good idea to completely rely on lead generation services because you are forced to be a victim of their terms, and 20% off the top is far from ideal terms.

  • Doug C. April 7, 2015

    I think I’ll continue to hand out my flyers and use my yard signs. 20% is too much in my opinion. I believe in a loyal customer base. My ‘friends’ are all tickled when they get a crisp ten dollar bill as a one time referral fee. They don’t have a clue who called me and they don’t care, but that yard sign they agreed to put in their yard paid off.
    I don’t have a problem with a background check and hope to never encounter a problem. What good does it do when a ‘crew’ shows up and ends up doing faulty work. The good side of it is I do get the final call to babysit the mistake and create a ‘friend’ pretty much for life.

  • Terrence April 8, 2015

    A lot of our services are highly variable and requires an on-site visit to give an accurate quote. One thing I don’t understand about Amazon’s local services is once someone “buys” the service, what happens if the quote needs to be adjusted when the service provider goes on-site (due to something unexpected)? And if the quotes need to be adjusted, does Amazon make us report back to them so they can get their 20% commission off the full price quote??

    • Dan Perry April 8, 2015

      Good questions Terrance. I think that the first issue you bring up will be solved by them only offering certain services or packages. For example, there might be a “full day of handyman services” package which would cover the full day. Or, TV Wall Mounts which aren’t all that variable in most cases.

      I know that Amazon handles the billing and the customer pays them directly and Amazon pays the service provider, but I’m not sure how adjustments to the quote would be handled. I think in most cases it will be up to the service provider to quote package prices that will average out to be a good value. Some jobs will take longer and some will take less time, but as long as it evens out it could work.

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