Should a Contractor Advertise with Amazon Home Services

Ama­zon has decid­ed to com­pete with com­pa­nies like Porch, Ang­ie’s List, Houzz, and Yelp by offer­ing its own home improve­ment lead gen­er­a­tion ser­vice for its loy­al mem­bers. This real­ly makes a lot of sense for Ama­zon, since they are the best at know­ing their cus­tomer’s buy­ing behav­iors. I think this can be a real bless­ing for cer­tain ser­vice providers. Yet, I also think it can have a real neg­a­tive effect on cer­tain home improve­ment contractors. 

Pos­i­tive Rea­sons to Advertise

• Small in Size or Lim­it­ed Resources: If you are new in busi­ness or you have a lim­it­ed mar­ket­ing bud­get, Ama­zon could pos­si­bly be a great place to get leads and build your busi­ness. You real­ly have noth­ing to lose. You can set­up your ser­vices and account pret­ty quick­ly. Then you sit back and allow Ama­zon to work their mag­ic. If you are very respon­sive, pro­fes­sion­al, and have rea­son­able prices, you will get work! Also Ama­zon is one of only a few com­pa­nies that offers a pay for per­for­mance mod­el. This means you only pay when you sell a project. This is where I think it can have neg­a­tive results too, and I’ll talk about that below.
• Mar­ket Dom­i­na­tion: If you want to make sure con­sumers find you every­where, you might be one who will want to con­sid­er Ama­zon. Maybe you see that your com­pe­ti­tion is on Ama­zon so you feel you need to be there. That is some­thing you will have to decide.

Neg­a­tive Rea­sons to Advertise

Now for the neg­a­tive part. Let me be clear. I am reg­u­lar user of Ama­zon and a rav­ing fan of how this com­pa­ny has built an amaz­ing busi­ness mod­el. I use them myself to buy hun­dreds of prod­ucts — includ­ing flow­ers! (yeah they made it eas­i­er to buy flow­ers than ever before.) Yet, I am hear to help my clients spend and mar­ket wise­ly and build THEIR brand. Key phrase in the last sen­tence: Did you catch it? Adver­tis­ing on Ama­zon builds Ama­zon’s brand more than it does your own. When you decide to get leads from Ama­zon, you are a sub­con­trac­tor for Ama­zon. Ama­zon is the Gen­er­al Con­trac­tor and you are the ser­vice provider. If there is a prob­lem on a job site, Ama­zon is the one who ulti­mate­ly owns the job, not you. They take respon­si­bil­i­ty. You will then for­feit your client(s) to be owned and ser­viced by Ama­zon. This is a very bad mod­el if you are try­ing to grow your com­pa­ny and have cus­tomers that become rav­ing fans. If your cus­tomer comes through Ama­zon, they can­not call or email you out­side the Ama­zon sys­tem. So when 6 months from now, your client calls you back and says, ​“Hey Dave, I loved the paint­ing work your team did for me last fall. Can you come out and give me a bid for paint­ing 2 bed­rooms?” You will have to respond with, ​“We’d love to do that. Please sign into your Ama­zon account and fill out an esti­mate request. We’ll then cre­ate the pro­pos­al and sub­mit it through Ama­zon. Since you heard about us through Ama­zon, we are not allowed to work with you out­side of Ama­zon!” What that con­sumer does not know is that they are also going to pay a pre­mi­um too. Since Ama­zon is act­ing as the gen­er­al and tak­ing respon­si­bil­i­ty, they have to get paid too, right? So, their fees will nor­mal­ly add any­where from 10 – 15% on each project.

Exam­ple of How This Plays Out

The rea­son I am writ­ing this blog is because I have been test­ing out Ama­zon’s Home Ser­vices with a few clients. It took us awhile to fig­ure out the sys­tem and how it worked. Over the 8 – 10 months, my client was on Ama­zon’s ear­ly adapter pro­gram, he got sev­er­al leads a month. It took quite a few months to sell a project, but it final­ly hap­pened. The job was a prof­itable one even after pay­ing Ama­zon. Sounds great, right? Then around 2 months lat­er anoth­er great lead came through. This was where a prob­lem sur­faced. The Ama­zon cus­tomer knew there was a markup on the price, but he did not want to pay the mark up. If my client did not mark it up to pay Ama­zon, he would have lost a lot of mon­ey (all the prof­it). The prospect also want­ed to work with them out­side of Ama­zon. Based on the con­tract they signed, they were not able to do this either. It was a rather large project (could have been over $15k). It was at this point they knew they could con­tin­ue with Ama­zon because this prospect would always pay 12 – 15% mark up and have to work with Ama­zon. They would not be able to send him any emails, cus­tomer sat­is­fac­tion sur­veys, get refer­rals from him etc. So any busi­ness suc­cess in growth would be at the mer­cy of Ama­zon Home Ser­vices.

You Decide What Is Best For You

Per­son­al­ly, I would not rec­om­mend a seri­ous busi­ness own­er to be involved with Ama­zon Home Ser­vices. It will be com­pli­cat­ed. I would not allow this lead gen­er­a­tion ser­vice to dis­tract you. I would not adver­tise just to make sure my name is every­where. That is not always the best way to mar­ket your busi­ness. I think it is best when you can build a brand where con­sumers know, like, and trust YOU…and they can work with YOU and not through some­one else. You have to decide, but the only rea­son I can see adver­tis­ing and using Ama­zon for lead gen­er­a­tion is if you do not want to mar­ket your busi­ness at all.