Is Amazon Testing a Local Marketplace?
Amazon has been reported to be prepping a local services marketplace test in one market. If the article is accurate, this effort won’t necessarily be adopted into a nationwide product — Amazon frequently tests product concepts — but should be watched with interest.
Amazon Marketplace — or whatever its final branding — would complement existing Amazon services in local, including Amazon Local, a Groupon-like deals entity now in dozens of markets; and Amazon Fresh, which is providing grocery delivery service in Seattle, San Francisco and southern California. (Amazon also touches the local marketplace via Amazon Web Services and Amazon Payments, both of which provide digital infrastructure support for local merchants.)
If launched, Amazon Marketplace would fit into the company’s mission of making it easier for consumers to make informed decisions on purchases and to buy goods and services. It would also help source deals at the local level for Amazon Local. Amazon may be frustrated at the difficulty of sourcing deals through third parties, and the expense of a local sales force, which is mostly used to sell to local retailers. As described, Marketplace would be an automated product.
It could also fit into Amazon’s growing advertising business, which has made a big play via Kindle Offers and much more importantly, Product Listing Ad tiles at the top of search pages — monetizing photo search for the first time. Amazon made $600 million from advertising in 2013, but hasn’t yet gone into local advertising, which represents a new frontier.
According to the Reuters article, the initial effort for Amazon Marketplaces would focus on hiring local services, rather than goods. Yelp and Angie’s List are the biggest players in the space, but may have less than 10 percent of the overall market.
Amazon may seek to implement the infrastructure for Marketplaces from Pro.com, a new, 30 person service that includes 15 ex-Amazon employees. Pro.com has raised $3.5 million, including funds from Amazon CEO Jeff Bezos. The service matches contractors with consumers and providing job estimates. But Bezos has never sold his personal investments to Amazon (unlike Oracle’s Larry Ellison and AOL’s Tim Armstrong). It seems especially unlikely because Bezos is only a minority investor in the company.
In any case, Amazon’s launch of a services marketplace would be somewhat ironic. In April, the Bezos-owned Washington Post discontinued a service which is almost exactly like what has been described for Amazon Marketplace — Service Alley. (The greatest irony of this is that Service Alley was built — pre-Bezos — on top of TeachStreet, a start up that Amazon purchased in an acqui-hire, and then discontinued).