Amazon Could Change How Disaster Mitigation Services Are Purchased

Last updated on Monday, January 15th at 4:36 p.m.

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Launched in 1999 as an online book retailer, Amazon has grown to become the seventh largest company in the country. One of the keys to their success is Amazon Prime, which includes free 2-day shipping on all Prime items and a number of other services and offers.

Amazon launched Home Services in 2015. The service provides an upfront estimate and allows consumers to add that service to their cart like any other item. While they do not offer disaster mitigation services currently, they have the system in place to expand into water damage or other disaster response verticals at any time.

What Sets Amazon Home Services Apart For Consumers

Unlike many other home services providers, Amazon’s model for Home Services is based on selling a fixed service with upfront pricing. The price is based on estimates set by service partners. This allows consumers to add items to their cart and checkout like they would any other item on Amazon.

Amazon offers a wide array of services including installation, assembly, yard work, and cleaning services. The majority of their home improvement services center around replacing an existing item or installing a new item for cosmetic or comfort issues.

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Each service includes a project scope that details what customers should expect from the service professional completing the job. After checking out with their service, customers pay Amazon for the service and schedule a time for it to be completed.

Like HomeAdvisor, Angie’s List, and Google Local Services, Amazon Home Services is largely focused on being easy for the consumer. Considering that Amazon accounted for 43% of online sales in the US in 2016, some customers will undoubtedly add a clogged drain repair service to their order of light bulbs and mac and cheese.

How It Works For Service Providers

While you can apply for Amazon Home Services, it’s largely an invitation-only service. If selected, they perform a background check on your business before allowing you to continue. While you do get to set prices to a degree, Amazon encourages you to be as competitive as possible.

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Amazon charges 20% on the portion of the service up to $1000 and then 15% for any portion of the service greater than $1000. Additionally, the customer pays Amazon, who then pays you on 14-day intervals. This means if you complete a job today, you won’t see that money for two weeks.

If the service cost more than originally estimated, you need to update the project’s scope in the Amazon system and the customer will be charged appropriately. Since most items are fixed services, like installing a faucet, it’s unlikely that the majority of services would result in additional charges. Obviously, that not always the case with disaster mitigation.

How Amazon Could Move Into Disaster Mitigation In The Future

Amazon is an extremely agile company. Since they already offer repair services for toilets, leaky faucets, and garbage, adding disaster mitigation services to the store is a logical next step. Obviously, they will need partners to perform those services, but it’s likely some existing partners already do so.

Although phone calls dominate the disaster mitigation industry, some customers prefer as little personal interaction as possible. Given that 56% of GenXers and 67% of Millenials prefer to shop online and the appeal of fixed-price shopping, adding disaster mitigation services could be quite successful for Amazon.

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Unfortunately, a fixed service model poses a significant challenge with disaster mitigation. You’ll need to perform an actual estimate and compare to the price the consumer has already paid. Since it’s in Amazon’s best interest to have the lowest price available, consumers may get angry with you, and not Amazon, for additional charges.

Dealing with project scope in their fixed service model may be the only challenge that keeps Amazon from adding disaster response services. That said, Amazon is great at identifying and solving problems. Just look at how they have privatized their delivery services and added grocery and restaurant delivery.

The Not Entirely Happy Amazon Happiness Guarantee

Amazon offers consumers a Happiness Guarantee to ensure they are happy with their services. In the guarantee, Amazon promises to act as a mediator between the consumer and the service profession, refund the purchase price and cover damages up to $2500, and-or file an insurance claim against their insurance.

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At first glance, their guarantee will likely give consumers confidence in the final product. As with any guarantee, there are always conditions. Two of the conditions are clear cut and make perfect sense: the customer is unsatisfied and the service was completed in the last 90 days.

Another condition is that service must be purchased through Amazon, which sounds straightforward but could get complicated. How many times have you shown up for a job and needed to do unanticipated repairs or been asked by the customer to look into something else?

The final condition complicates the situation further by limiting the scope of the work to what is included in the description of the service as listed in the store and to changes made through the Amazon system. If the customer asks you to do something else, you need to immediately stop and update the order.

While most services will likely go without incident, if you forget to update the project scope on just one job, you put yourself at risk. Considering that Amazon’s customer is the consumer, it’s in Amazon’s best interested to keep them happy.

The situation with the guarantee is likely to get more complicated – and frustrating – if they do move into disaster mitigation. Imagine needing to stop work at every step of the process to update the order. It could become an extremely inefficient way to complete a job, especially in an emergency.

Even if their Happiness Guarantee is more flexible in practice than how it’s explained in the terms and conditions, it’s still likely that the costs will get passed on to you if a consumer has an issue. While not explicitly stated, it’s like that you will be removed from the program as well.

Is Amazon Insurance Coming Soon?

Amazon recently made waves by recruiting insurance professionals. While they haven’t announced official plans, the internet giant could cause a major distruption in the insurance industry. They appear to be focusing on European markets for now, but could expand into the U.S. at any time.

In sharp contrast to Amazon’s positive reputation, many consumers have a negative opinion of insurance companies. With their customer focus and analytic-driven algorithms, Amazon could create a digital insurance ecosystem that resonates with consumers. This could also be their key to adding disaster mitigation to Amazon Home Services.

When a customer has a disaster, they open their Amazon insurance app, add photos, and include a description of the damage. Their claim could be reviewed within minutes and an Amazon approved contractor could be dispatched directly. This is only conjecture, but it wouldn’t take much for a company like Amazon to roll a system like this out.

While it’s unlikely that Amazon Home Services will significantly impact to your disaster mitigation business, it’s definitely something to keep an eye on. Given that the upfront pricing and traditional shopping cart check out favor consumers, this could be a completely new way of selling disaster response services. The potential for an insurance division could cause another disruption to water damage businesses.

As we’ve said before, the most effective marketing strategy will be to continue using a variety of different marketing channels. As with all marketing, you should measure the results and evolve your business strategy based on what is most successful for you.

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