Handicapping an Amazon Local Marketplace

Amazon logoYesterday Reuters reported Amazon would be rolling out a local services marketplace “later this year.” The article speculated that could mean “anything from babysitters to handymen to birthday clowns.”

Amazon has been distributing local daily deals, in partnership with LivingSocial, since 2011. Originally LivingSocial was doing all the local sales for Amazon. It’s not clear whether that’s still true or whether Amazon has taken on any of the sales effort in the three years since inception.

In the UK, however, Amazon has experimented with its own direct telephone sales force. Accordingly the company does have experience with selling to local businesses.

Amazon Local

Regardless of whether and how it approaches sales, the Amazon Local deals marketplace lays the consumer foundation for a broader “Amazon Local” offering that could turn it into a much more direct competitor of Google, Facebook, Yelp, YP and others.

Ads could take a variety of forms (search, display, video). They equally appeal to brands and national-local marketers that fulfill offline.

At the LSA conference earlier this year in Southern California we speculated about whether (or when) Amazon might move into local services and compete with Google et al.

Recall that in the roughly 2004 – 2006 time frame Amazon launched and operated a yellow pages site and visual mapping product called “block view,” which was a precursor to Google Street View. Below is a screenshot of one of the old Amazon yellow pages profile pages.

Geekwire also reports that Amazon has “quietly been collecting” local reviews for the past month or so. All of this seems to suggest Amazon’s inevitable re-entry into the directory/local search market.

Amazon YP

The company has enormous traffic and an extremely strong consumer brand. It also has payments, cloud services (hosting), mobile (and mobile hardware) and delivery services. Among other things, Amazon could host SMB websites (online + mobile), process their payments and provide an e-commerce platform for SMBs that sell goods.

The company could also deliver an array of marketing services and infrastructure support to SMBs in a “one stop shop” fashion.

Given its brand and loyal audience of millions, Amazon could relatively easily expand the scope of and use cases for Amazon Local. The real challenge would be engaging business owners and gaining SMB ad sales.

It could certainly use its brand strength and experience with telephone sales to its advantage in that area. Yet Amazon doesn’t need to generate local ad sales revenue right away. The company could operate a purely consumer facing local search/directory site (even for a few years) before it ever sought to generate ad revenue. But Amazon could, if it wanted, fairly quickly generate sales from national/brand advertisers that fulfill or distribute locally.

In terms of local sales, there’s very interesting discussion in the Reuters article:

In recent months, Amazon has reached out directly to service companies as well as to several startups in Seattle and San Francisco that already connect service providers, from home repair to massages, to customers through their own web sites and mobile applications, according to the people.

It thus looks like Amazon is contacting SMB aggregators, who do the direct sales and servicing of accounts. In that context, which I’m sure would be a temporary step, Amazon becomes a distribution or traffic source and, potentially, another alternative to Google. That might be welcome to many SMB channel partners.

It’s not a foregone conclusion that Amazon will launch this local marketplace, and, if launched, that it will succeed. But Amazon certainly has the potential to become a formidable competitor in the market.

While it’s premature to pick winners and losers, there are a number of companies that could suffer should Amazon “go for it.” What do you think?

Do you think that Amazon could/would succeed as a local consumer destination? Who might suffer or be adversely affected by such a move? And would the company have any greater success with SMB self-service and/or local ad sales?

Postscript: Amazon’s impending move into the smartphone market (next week) may be playing here as well. While Amazon has always been interested in the “Local”/SMB market, the rise of mobile and online-offline may have partly motivated the company to re-enter the segment.

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7 Responses to “Handicapping an Amazon Local Marketplace”

  1. Malcolm Lewis says at

    I wonder what it would take for people like me to stop searching for local businesses on Yelp or Google. I’ve thought for years that Amazon should buy Yelp (or Fourquare) and own “reviews” for both products and services.

  2. Greg Sterling says at

    I think it’s certainly possible with the right combination of content (incl. reviews) and usability. We’ll see if anything like that shows up.

  3. ben says at

    yeah this is pretty interesting. Makes sense that they could do for local merchants what they’ve done for products in terms of reviews and recommendations, that doesn’t seem like too much of a stretch. 
    Although in general I think that using reviews as the basis for local discovery could seemingly only take you so far, and building up a depository of original quality reviews is not a small task, and not one that Amazon seems particularly 
    well suited for, at least compared to the more organic “sell products therefore offer product reviews”.

    This could be really quite interesting: ‘Among other things, Amazon could host SMB websites (online + mobile), process their payments and provide an e-commerce platform for SMBs that sell goods.”

    if they were to introduce something in this area that would be much more interesting for local discovery/search imo. For some clients that already work with Amazon extensively online it seems like Amazon may have an advantage in selling these services in to the brick and mortar side, but for everyone else (the vast majority) it seems they’d face the same tough/long haul sales process.

    But its interesting to speculate about, they certainly have some of key pieces there to give it a go.  

  4. Greg Sterling says at

    Like Facebook there’s a lot of potential here. The level of commitment remains to be seen, however.

  5. Danial says at

    Could Amazon be seeing the product transactions happening on houzz.com and thinking that they need to compete?

  6. Greg Sterling says at

    Home services is a very big “industry” and Amazon knows this. However I don’t think it’s Houzz in particular driving this ambition (assuming the story is correct). I think it’s a broader concept that to some degree returns to Amazon’s early YP days.

  7. online shopping stores says at

    There are sites that offer product comparison as well.

    Unless you’re doing your online shopping at a place that
    has a physical location in your state, you’ll
    most likely be able to avoid paying sales tax. One of the most visible advantages of online shopping is its convenience.

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