Amazon Corners Yelp With Its Latest Move In Online Services

NEW YORK (TheStreet) - Amazon (AMZN) plans to expand its reach in the online sector. Analysts report that the tech heavyweight is looking to create an online local services marketplace within the year.

The description of Amazon's latest venture, creating a local marketplace service, overlaps with the service already provided by Yelp (YELP). Yelp is an online city guide that helps people find the best local businesses, allows potential customers to see deals as well as gives users the ability to rate and review venues.

Robert Peck, analyst at SunTrust, describes the role of the online retailer's next platform to be used "for consumers to search for, compare and transact with local service providers ranging from plumbers to massage therapists to accountants to many other wide ranging offerings," according to a report published Wednesday.

According to Reuters, Amazon is planning to launch a local services marketplace and is looking to introduce its new product in San Francisco and Seattle before a nationwide reveal.

Despite a potential market war with the online service juggernaut, analysts say Yelp does have some leverage against the scale and reach of Amazon - its content. Yelp's seniority in the local services marketplace helps its case, as seen with other companies like Grub Hub and Open Table that have attempted to challenge Yelp in the past.

"We would not expect any impact to Yelp from Amazon's initiatives in the near to intermediate term but we do believe the threat warrants monitoring," writes Peck.

With Amazon's recent expansion into the payments services industry invading a sector originally spearheaded by eBay's PayPal (EBAY), this move for the local marketplace shows Amazon's desire to grow ever larger in online services.

According to Peck, this push by Amazon could create additional threats to Yelp which include increased interest from Google (GOOG), eBay, Yahoo! (YHOO) and even Apple (APPL) in Yelp's market.

"We believe a concerted push by Amazon could trigger these larger players to look harder at local assets including Yelp."

This is not the first time that Yelp has been in by a big name in the online business. In 2013, Yelp was one of the major names that was speculated to be a potential partner for Yahoo! after CEO Marissa Mayer commented on the company's need to move to more personalized content and increased product innovation. 

Yelp met the end of its bullish streak of 2013 with a plunge in share price during the first quarter of this year.

Shortly before Wednesday's close, Amazon's shares were higher by 0.69% to $334.70.

Yelp shares were up by 0.80% to $65.52.

-Written by Kathryn Mykleseth in New York.

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