Pieces of the Puzzle
Three years ago, amid much fanfare, Amazon launched its Home Services division. The initiative allowed customers to book small home improvement jobs—such as wall-mounting a TV or even tiling a bathroom—through Amazon.
Almost immediately there were problems. For starters, service pros were required to pay Amazon a commission on each project, sometimes as high as 20 percent. That didn’t fly in a labor-starved market like home improvement. Also, a lot of professionals starting using the service as a way to make initial contact with clients and then cut a side deal for any future work. This eliminated the middleman, taking revenue from Amazon.
But over the past few months, the company made a bold move toward growth in the home services space. In late March, Bloomberg reported that Amazon started a housekeeping service in Seattle that uses actual employees, rather than independent contractors, to clean people’s homes. That service is called Amazon Home Assistants. A quick look at reviews from clients suggests that the initiative actually began in the middle of 2017.
For Amazon, this means a much greater investment. The company now has to cover all of the expenses that come with in-house employees while also providing any supplies they need for the job.
But with that gamble comes great potential. An in-house staff gives Amazon more control over the customer experience while also easing the workflow problems that come with independent contractors. And there’s a legal upside as well. Companies like Uber and Handy have been sued by workers who claim that they should be classified as employees rather than independent contractors. This won’t be a problem for Amazon Home Assistants.
So why is this important to remodelers? Three reasons. First, it’s easy to imagine that if the new model works for housekeeping, Amazon will then launch it for handyman services. Depending on how well they pay, this could further squeeze remodeling companies with small jobs divisions who are already challenged with staffing shortages.
Second, with this move Amazon is signaling that a) they see growth in home improvement and b) they are trying to place themselves front and center in that market. That alone makes this a trend worth watching.
And third, Amazon creates expectations.
The company popularized an e-commerce experience that set the bar for consumers today regardless of what they’re buying. Homeowners expect remodelers to be on top of technology, whether that’s VR/AR, new communication tools, or the ability to conduct sales calls online. We don’t know the future, but it’s safe to say that it’s digital, and Amazon is involved.
