Amazon aspires to an ‘everything’ store – once a customer comes on Amazon platform then she should not go elsewhere & spend all her shopping dollar & more on Amazon platform.
A step in this direction was to plug a gaping hole in its existing business model which was leaving money on the table.
Amazon has 85 million customers who buy products from it. After purchasing it they have to either assemble it / get it installed. In addition, during normal usage these products requ
ire servicing / maintenance / repair. The size of this business is estimated to be approximately $600 billion in 2014. Surprise of surprise Amazon had left this opportunity untapped.
To tap into this opportunity, Amazon has introduced Amazon Home Service (AHS). It is a market place which will connect Home service professionals who offer services ranging from installation and assembly to diagnostics and repair to Amazon's 85 million customers.
AHS is a ‘vetted’ platform which follows ‘by invitation’ policy for permitting service providers to list on its site. And Amazon is ‘super picky’ – only 3 out of 100 pros in an area is invited to join the platform. This helps amazon promise & deliver 100% happiness guarantee.
For the rest of the local service providers who have not been extended an invitation & wish to be on the platform all is not lost. They can apply to Amazon who will carry out a due diligence on 5 parameters & depending on how they fare the ‘invitation’ will be extended.
One core benefit that Amazon proudly promises is speed of shopping. With AHS, it will get further boost. A shopper can now browse, purchase, & directly schedule its installation all with in 60 seconds.
Are there additional benefits a customer can enjoy? Yes ofcourse. They will not have to pay anything more to access these ‘vetted’ service providers. And Amazon too will benefit because it does not have to spend its precious dollar on advertisement & promoting AHS. Its presence on the plateform inhabited by 85 million inhabitants will make the service attractive.
Bottom line: Are you leaving money on the table? If yes do come up with a new business model which can capture it in your P&L!
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In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous
Strategy with RS posts can be found here
