Amazon adds 11 markets to its Home Services program

July 22, 2015 12:16 PM

(Bloomberg)— Inc. is expanding its home-services program, which lets people find prescreened plumbers, rug cleaners and even yoga teachers, to 15 cities as the online retailer seeks new sources of growth.

Amazon said Wednesday that it’s adding Atlanta, Chicago, Dallas, and eight other markets to the program. In March, the world’s biggest e-tailer introduced Amazon Home Services in New York, Los Angeles, Seattle and San Francisco, challenging user-review sites such as Yelp Inc. and Angie’s List Inc.

Customers can find professionals to paint their homes, clean gutters, install home theaters and give guitar lessons. The Seattle-based company estimates U.S. residents spend $640 billion yearly on the more than 900 services offered, Nish Lathia, general manager, said in an interview.

The expansion represents Amazon’s latest attempt to broaden beyond online sales of books, electronics and household items. The company, No. 1 in the Internet Retailer 2015 Top 500 Guide, also has a fast-growing cloud computing division that stores data for such companies as Pinterest Inc. and Netflix Inc. It offers online video and music streaming, and makes hardware devices such as the Kindle e-reader, which helped create the market for electronic books.

The company is also seeking to expand internationally, and announced last month a major push into Latin America with a new online storefront for Mexico.

Amazon needs new markets—added are Atlanta, Boston, Chicago, Dallas-Fort Worth, Houston, Miami, Philadelphia, Phoenix, San Diego, San Jose and Washington D.C.—to maintain the growth that investors covet. Analysts estimate 2015 revenue will increase 16% to $103 billion, according to data compiled by Bloomberg. Sales advanced 20% last year.

Marketing deal

Amazon Home Services takes a 10-20% commission of each job booked through its site, Lathia said. Rather than pay for marketing, professionals hired through the program share revenue with the company in exchange for access to its loyal customers.

Yelp sells advertising on its website, which offers free access to consumer reviews about local businesses. Angie’s List charges for access to reviews and also sells advertising. In March, Angie’s List founder Angie Hicks told Internet Retailer, “Given the tremendous size and need for innovation in the local services marketplace, it is not surprising that consumers will have choices. We see Amazon’s approach as validation of the local services strategy Angie’s List has pioneered, including the ability to buy local services online."

Google Inc. also signaled interest in the home-services market by hiring part of the team at Homejoy, a housecleaning startup that is shutting down at the end of the month.




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