In June Amazon quietly announced an extension of Amazon Local for services, through which shoppers are using Amazon to find the local businesses to that provide a broad number of ‘services’ across repair, installation, and other amenities.

Amazon Local services, an Amazon feature which connects local third- party businesses with Amazon shoppers for services includes computer repair, appliance installation and even finding babysitters.

“Amazon’s new venture is indicative of the untapped potential of the local services market, a multibillion-dollar opportunity that has been followed for years by startups like Thumbtack and established players like eBay”- Forbes

Although Amazon Local Services isn’t new, its expansion and ecommerce impact have reverberating implications for service providers, Amazon shoppers, Amazon sellers and companies like Yelp.

How will Amazon Local Services impact the Digital ecosystem?

Below Amazon experts Rick Backus, Sprigley Allan, and Pat Petriello discuss how Amazon Local Services affects online shopping, and what the future holds for Amazon.


Amazon Local Services

Amazon Local Services acts as a middleman between consumers and service providers on Amazon.com. Shoppers who purchase something which requires installation or expert assistance can find that information on Amazon, right next to the item they are purchasing:

Amazon-local-services

Amazon shoppers can skip the hassle of navigating to an additional site in order to get services that correlate with items they purchase, increasing the ease of purchasing items which require assembly or additional resources.

Amazon-local-services

 

Amazon Shoppers benefit from Amazon customer focus changing “…the shopping experience as it makes Amazon< more of a one-stop shop.”- Sprigley Allan, Marketplace Analyst, CPC Strategy

“Amazon always prioritizes customer experience. Amazon local Services eliminates the need for Amazon shoppers to visit different location to purchase services relating to an item. It’s one stop shopping with Amazon trust baked in.” – Pat Petriello Marketplace Manager, CPC Strategy

For service providers, Amazon offers an almost unparalleled consumer base, access to roughly $22 million in offline Amazon shopper purchases every month- a substantive purchasing base for service providers.

Amazon Local Services Vendors

Similar to Amazon third party sellers, Amazon Local Service providers are vetted by Amazon, but can also be reviewed by Amazon shoppers; similar to how Yelp aggregates restaurant reviews.

Amazon-local-services22

Unlike Yelp, Amazon brand bring with it a significant amount of consumer trust.

“If I trust Amazon for product and sellers reviews, I have a level of trust that replicates Angies list for services. Shoppers understand they’re protected for purchases on Amazon with the A-Z buyer guarantee- they are always going to win. With Amazon Local Services, Amazon can capitalize on that existing paradigm, where customers have an equap type of confidence level with available services. Amazon’s ecosystem sets up trust.”

Amazon Local Services for Amazon Sellers

For Amazon sellers, Amazon Local for Services offers further incentives for shoppers to purchase on Amazon, an already profitable vertical for online retailers. Sellers for appliances for instance will potentially see increased Amazon sales as shoppers can choose a pre-vetted installation provider when they purchase their appliance on Amazon.

“Amazon Local Services presents a significant opportunity for Amazon in that in eliminates a large barrier to entry or big item purchases on Amazon, such as appliances. There is definitely going to be an impact here for furniture sellers, and other merchants such as computer component retailers” Pat Petriell0, Marketplace Manager, CPC Strategy

Amazon-local-services1

Amazon Local Services isn’t likely to push the sales needle for any Amazon Sellers, but it is likely to impact sales agnostic of the seller, with a disproportionate lean for Buy Box owners. Anotherwords, Amazon Local Service availability isn’t going to drastically increase your Amazon store sales, but it may help increase sales for items you sell- which will impact your profitability- particularly if you have higher Buy Box share for items which are seeing increased purchases.

“Amazon is obsessed with adding value for each shopper and they will let the data determine whether or not local services are adding value. They are the best retail company in the world at getting rapid feedback from their users and ultimately the growth of local will be determined by the market’s response to it.” – Rick Backus, CEO, CPC Strategy

Unfortunately, there is the probability that some shoppers may confuse service providers with the Amazon seller they’ve purchased from, which has the potential to create some negative associations with sellers. However, one would anticipate Amazon will work out any kinks in the system as services continues to expand.

“In most cases the merchant and service provider will be agnostic, but similar to how sellers receive negative reviews for products- a negative installation might result in a negative seller review which detracts from the seller experience.”- Pat Petriello, Marketplace Manager, CPC Strategy

“Amazon needs to get specific with terms of service; they need to be very clear to buyers about what installation entails to avoid confusion.”- Rick Backus, CEO, CPC Strategy

Amazon Local Services: Game Changer? Amazon-local-services3

The service based marketplace which is in Seattle (2013), New York, and Los Angeles, just recently rolled out for San Diego on Amazon, which provides an opportunity for increased visibility on Amazon for select San Diego Amazon sellers.

“While Amazon local Services may be valuable in some verticals such as electronics, I don’t see it becoming a fundamental part of the marketplace in the immediate future.” – Sprigley Allan, Marketplace Analyst, CPC Strategy

While Amazon Local Services does improve customer experience, it’s not going to revolutionalize the average Amazon shopper experience. However, Amazon’s impact on similar services may be substantive.

” I don’t feel this will add significant value to the shopper, and as a result, I don’t view this as a game changer. That said, the same thing was written about FBA a decade ago, so I’m not writing this off completely.” – Pat Petriello, Marketplace Manager, CPC Strategy

Amazon Local Services provides information and services across a wide swath of channels, placing Amazon in direct competition with pre-existing heavy hitters like Yelp and GeekSquad.

Amazon Local Services competes with:

  • GrubHub
  • GeekSquad
  • Angie’s List
  • Yelp
  • Taskrabbit

 

The Future of Amazon

Amazon doesn’t want to be just the best destination- they want to be the only destination for everything. Amazon Local Services allows Amazon to leverage existing resources to serve a shopper demand- linking supply and demand that already exists, but may not have the ability to connect.

Amazon’s whole ecosystem utilizes this paradigm- with Amazon Fresh leveraging local eateries, and Amazon.com highlighting products from various third party sellers.

 “I would not be surprised to see Google offer more of a comprehensive local service option.  Someone could also say that this is Amazon‘s response to Google’s local search and Google experts programs.  I think we will continue to see the detail page evolve and have more features as Amazon‘s capabilities as a platform grow.” – Sprigley Allan, Marketplace Analyst, CPC Strategy

As an organization, Amazon has shown a high comfort level taking risks (and sometimes failing) trying things that they think will make for a better customer experience. They want to be the destination for all purchases (product or), which is different than the destination for all online purchases or all product purchases, only.

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