Investopedia/Daniel Liberto: Amazon Hiring Cleaners to Disrupt $16B Housekeeping Industry

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Amazon Hiring Cleaners to Disrupt $16B Housekeeping Industry
By Daniel Liberto  March 29, 2018 — 6:34 AM EDT
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AMZN
Amazon.com Inc
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ANGI
ANGI Homeservices Inc
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+0.07%
YELP
Yelp Inc
41.28
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Amazon.com Inc. (AMZN) is keen to take another stab at breaking into the $16 billion housekeeping industry, only this time with a slightly different approach.

Bloomberg reports that the e-commerce giant is quietly hiring cleaners for a new housecleaning service called Amazon Home Assistants. The venture will start with a trial in Seattle and offer a weekly cleaning of a 1,500-square-foot home at an estimated cost of about $156.

The new offering marks a shift in strategy for Amazon. Three years ago, the company launched a marketplace to connect its customers with handymen, landscapers and housekeepers in their neighborhoods. The service, tasked with competing with the likes of ANGI Homeservices Inc. (ANGI) and Yelp Inc. (YELP), offered to connect contractors using their own vehicles, tools and supplies with new business customers, ensuring that Amazon took a cut without needing to hire staff or buy equipment.

The venture failed to live up to its initial promise, however, prompting the company to reassess its low-cost contractor business model. The online retailer’s unusual decision to fork out extra to employ its own staff and use its own products suggests that it now believes independent contractors are compromising the customer experience.

"All our technicians are Amazon employees who are trained professionals," the Amazon Home Assistants website now states. "We use 100% eco-friendly and kid-safe cleaning products which are rated 4 stars and above on Amazon. All our services are backed by our happiness guarantee. If you’re not satisfied, we’ll come back and fix any problems."

Amazon is keen to discover during this trial period if using its own housekeepers can help to differentiate its service from competitors and give it a better chance of succeeding in what is viewed as a very lucrative market. U.S. consumers spent $16 billion on home cleaning in 2017, according to ServiceMaster Global Holdings Inc., parent of the Merry Maids franchise.

"Any products that require additional services beyond opening a box, Amazon doesn’t do well," Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University, told Bloomberg. "The possible rationalization of hiring housekeepers is they are hitting a wall in selling products where service is important. They need to add end-to-end services to enter more categories, and that service needs to be branded. With independent contractors, you don’t get that." (See also: Amazon at $1,900 Possible This Year: Goldman.)

If the housekeeping tests work, Bloomberg reports that it could help Amazon to improve its other service-oriented areas, such as home improvement and electronics assembly and installation. (See also: Why Amazon Is Spending $1B on a Doorbell Company.)
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