Amazon moves beyond the box with Home Services
March 30, 2016 01:09 PM
Amazon.com Inc.’s stated goal is to have available every product a consumer could want, and a year ago it began moving beyond the box to offer shoppers services that go hand in hand with some products. Just added a garbage disposal to your cart? By checking a box a consumer can hire a local company to install it. Bought a treadmill? Here’s a local service that will put it together.
Dubbed Amazon Home Services, the service add-ons are now available for more than 1 million products sold on Amazon, No. 1 in Internet Retailer’s Top 500 Guide. Service providers are available in 30 metropolitan areas—up from four (New York City, Seattle, Chicago and Los Angeles) at launch last spring—covering more than 40,000 ZIP codes, Amazon says.
Here’s how it works: When a consumer in a covered area adds a product that may require services to his cart, he sees local providers that can provide the additional services, and their estimated prices. A consumer can browse the service providers in his area and their starting prices for different jobs within the Home Services area on Amazon, ranging from plumbers to landscapers. After selecting a provider, he selects three time slots he prefers.
Amazon then connects with the service provider and gets back to the customer, typically within 24 hours, about the booking, at which time the provider and customer can discuss any job requirements or pricing adjustments that may be necessary. For example, a vendor may list a rate for installing a TV mount. That price is for a standard installation on drywall. If a customer wants it mounted on a brick wall, the price is higher. The consumer and vendor have to sign off on any pricing adjustments, and all payments are made through Amazon, and are charged after the install is complete. Amazon takes a 10% to 20% cut of the final price, which is collected from the service provider.
If a consumer doesn’t select a service provider when buying a complex product, Amazon follows up with a post-purchase email alerting the shopper that additional services are available, says Erika Takeuchi, senior product marketing manager for Amazon Home Services.
“We’ve seen an uptick in the number of sales we have for home improvement and home goods—products where consumers may not have made or put off the purchase initially” because of the post-purchase service element required, she says. The number of consumers buying home services has grown 20% month over month, the company says.
Andy Baxley, owner of Already Assembled Inc., a provider of assembly services in the Baltimore area for more than 10 years and among the first vendors to join the home services program, says he hears similar comments from clients when he’s putting together a product they ordered on Amazon and hired him to put together. “I’ve been told a number of times by customers, ‘I wanted this desk but [didn’t buy it because] I knew I had to put it together, and I didn’t want to put it together,’” he says. Offering install services is what convinced them to buy, he says.
Baxley says about 75% of the jobs he’s been doing lately have come through customers hiring him through Amazon. The most popular jobs he’s hired for are to put together exercise equipment and furniture. While consumers can buy services a la carte through Amazon for goods purchased anywhere, Baxley says about 95% of the Amazon-referred jobs he gets are to put together products consumers purchased on the site.
Baxley says there are a few other vendors in his area that do similar work through Home Services. He says his wife coordinates most of his jobs and actively manages the prices Amazon displays for his services, sometimes lowering a rate by a penny or two to beat a competitor and ensure consumers select Already Assembled for the job.
Takeuchi says Amazon “maintains a very high bar” and thoroughly vets all local service vendors it allows to appear on the site. That process includes reference and criminal background checks and that the firm maintains all necessary insurance or trade licenses. Amazon also conducts ongoing performance checks. Consumers can rate vendors after a job is complete, and shoppers on Amazon.com see the star rating and can read comments from other customers.
Demographically, Amazon says Home Services nets greater interest from working families, people who have recently moved and empty nesters. The markets where consumers use Home Services the most are New York, Los Angeles and Washington, D.C.