Amazon is planning to launch a marketplace for local services later this year, which would mark the company's entrance into a new sector away from its focus on selling products online.
The marketplace will connect service providers such as handymen and private tutors to consumers who are looking for such services within their local area.
Amazon's move puts the company in direct competition with consumer review websites such as Yelp and Angie's List, which have tried to make the search of consumers for local service providers by ranking listed businesses. Amazon will also compete with U.S. home improvement stores such as Lowe's Companies and Home Depot, which have invested in systems to connect local service providers such as painters and plumbers to their customers.
Amazon's marketplace also pits the company against eBay, which has been testing eBay Hire. eBay Hire will connect products being sold on the auction website to the profiles of providers offering services connected to the product. For example, an eBay purchase for boxing equipment will also feature links or advertisements of boxing instructors in the buyer's local area. There are currently no commissions being charged by eBay for this service, though the company has said that it will do so eventually.
Thumbtack, however, is a website that has a different approach to local services. On the marketplace, consumers are allowed to post the jobs that they want done, and then service providers can then compete with each other in bidding to win the right to perform the posted task. Consumers can post their jobs on Thumbtack for free, but service providers are billed every time they are introduced to a potential customer.
Thumbtack CEO Marco Zappacosta said that he has been anticipating Amazon's entry into local services as the company is looking to expand to new businesses.
"I can't blame them," Zappacosta said. "This space is so big that given how ambitious they are and how they want to own as much wallet share of their customers as possible, they have to try. The question is whether this plays to any of their strengths."
Zappacosta, however, thinks that Amazon has a long way to go before mastering the local services industry because of the difference between selling services and selling products.
"You can't go after a few distributors and get all the titles," Zappacosta said, comparing services to books. "There's no no wholesaler than you can hook into that gives you access to the market. You have to go professional to professional to find them."
Amazon is looking to launch the local services marketplace on a city-by-city basis, in the same way that the company launched Amazon Fresh, which is the company's delivery service for groceries.
