Amazon Home Services expands to 30 cities in first year

By Daphne Howland | March 30, 2016

Dive Brief:

• A year after launching its Home Services business, which includes in-home help from housecleaning and plumbing crews to assembly of big-ticket items, Amazon has expanded the effort to more than 90% of the U.S., according to a company spokesperson.
• Amazon said Wednesday that it estimates the on-demand market for home services at some $400 billion to $800 billion, and that to meet such demand, it has added 500 new services, bringing the total to 1,200.
• Amazon Home Services competes with the likes of Home Depot and Best Buy and even Ron Johnson’s fledgling effort, Enjoy, as well as with crowd-sourced business directory Angie’s List.

Dive Insight:

Amazon Home Services has grown from four metro markets 12 months ago to 30 U.S. cities. The largest markets are Los Angeles, New York and Washington D.C. “It’s because of the density of the metro area,” said Amazon spokesperson Erika Takeuchi, according to reporting from a press release received by several news outlets.

Amazon’s Home Services unit is another classic example of how the e-retail giant rarely limits itself to retail and is willing to launch and quickly expand any effort in any consumer segment that the company believes it has the potential to disrupt.

"They are uncovering ways of making the purchase of almost any product easier and more cost effective than shopping in a traditional store," Robert W. Baird & Co. analyst Colin Sebastian told Bloomberg. "The barriers between consumers making large appliance and home purchases online are falling quickly, and the home-services integration with Amazon is a great example of that."

At this point, Amazon sells more than a million products that give shoppers in certain cities an option to request help with assembly and installation. And that is boosting sales, according to Amazon spokesperson Takeuchi. The most popular services requested are mounting flat-screen televisions to walls and assembling treadmills, she said.

The growth of Amazon Home Services means that rival retailers like Home Depot and Best Buy must continue to offer similar customer services in order to keep pace. Amazon’s move into the space could pose even more problems for competitors as more consumers realize that Amazon offers home services, according to Forrester Research analyst Sucharita Mulpuru, who notes that Amazon also is greatly helped by its reputation for great customer service. 

"Amazon should absolutely be well positioned to do well here, particularly since they’re putting the brand, which so many people trust, behind everything as a guarantee," Mulpuru told Bloomberg. "Local big boxes are the ones most likely to feel the impact of this long term, but for now I don’t think most people are even aware that Amazon even offers any of these end-to-end solutions."