Amazon.com Inc is launching a home services marketplace that will connect customers with electricians, plumbers and painters in a move to have its services tied to every product sold on its website.
Amazon Home Services, which will launch on Monday, will allow customers to buy 700 services such as car maintenance, TV wall-mounting and house cleaning at upfront prices. The quality of the service will be backed with an Amazon guarantee, which the retailer uses to vouch for products sold by third-party sellers on its website.
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A home services marketplace will extend Amazon's role as a middleman for third-party vendors, which account for about 40 percent of its sales. It would also help Amazon gain an edge in the fast-growing services industry in the U.S. which the retailer estimates to be around $630 billion.
"Third party estimates show that customers spend four times more on services each year than they do on physical products," Peter Faricy, vice-president, Amazon Marketplace told Reuters.
"So for us the opportunity is very big," he said.
Around 85 million Amazon shoppers buy products that require servicing or installation, the company said. Amazon will roll out the service nationwide with "high coverage" in Seattle, San Francisco, Los Angeles and New York.
Services marks a new frontier for Amazon, which has focused on selling products as it expanded from books into consumer goods, groceries and media. Local services have been tough for marketplace companies to turn a profit, since offerings must be tailored to each city or region.
Amazon will be in direct competition with Angie's List Inc, Craigslist Inc, and Yelp Inc as well as U.S. home improvement chains like Home Depot Inc and Lowe's Companies Inc, which have invested in ways to link customers with local plumbers, painters and other service providers.
Amazon will hand pick service professionals after running background checks and offer to match prices if customers get a lower price for the same service and professional on another site, store or directly from the professional within 30 days of a purchase, Faricy said.
Amazon Home Services will have a revenue share model with the service providers. The retailer will charge a 5 percent transaction fee, along with platform fees ranging from 10 percent for custom services and 15 percent for standardized services.
(Reporting by Nandita Bose in Chicago)