Amazon Doubles Down on Its Home Services Program

E-commerce giant Amazon  (AMZN) is expanding its service that allows customers to find local handymen and professionals, a move which could threaten the already troubled Angie's List (ANGI) .

Amazon announced Monday that Amazon Home Services will be available in 20 more cities, bring the total to more 50 metropolitan areas across the U.S. including Indianapolis, Las Vegas, Cleveland, San Antonio, Raleigh, NC.

The Seattle-based e-commerce company first rolled out the service in 2015. Since its initial launch, the number of providers on Amazon Home Services has grown by over 1,500%, according to a company statement, offering more than 1,200 services such as lawn care, plumbing, electric work, home cleaning and more.

Amazon has undertaken a bevy of ambitious projects outside its core of e-commerce in recent years, including its Echo home speakers and Alexa digital assistant, Amazon Fresh grocery delivery service (and rumored upcoming physical grocery store locations) and several brick-and-mortar bookstores. 

With the expansion of its Home Services program, Amazon is taking on Angie's List, an online marketplace and review site that allows users to post comments about local service providers and businesses. Last year, the company rejected a $512 million takeover offer from IAC (IAC) , the parent company of HomeAdvisor, because it felt the bid was too low.

Now Angie's List is in turmoil. CEO Scott Durchslag said during the company's third-quarter conference call on Nov. 1 that Angie's List would begin exploring strategic alternatives, and the company has reportedly begun laying off employees in an effort to save an additional $15 million to $20 million in costs this year.

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Amazon has already been a part of the home services market for more than a year. Maxim Group analyst Tom Forte said that if the company is looking to grow this service, it's a good sign. "When Amazon expands an offering, it's either wildly important from a strategic standpoint or they're seeing something that they like," Forte said.

Forrester analyst James McQuivey noted recently that Amazon is hyper-focused on building its relationship with its "passionate" customer base by investing in more and better services -- and it seems to be working.

"People who sign up for three or more Amazon services (Prime, etc.) are the web's best possible customers," McQuivey said. "They spend more, they have robust digital lives, and Amazon... has them neatly connected to the company, probably for life."

While the expansion in its home services business could enhance the customer experience, Forte said Amazon could face additional snags on the supplier end. "If you're a well-established local service provider you may hesitate to join Amazon's platform either because they'll take too big of a cut or you're getting enough business on your own," Forte noted. "But considering that they're expanding, [Amazon is] seeing data points that they like."

Forte added he isn't convinced yet that the company has hit a home run with Home Services. "But I do see the potential to drive sales of products," Forte said.

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