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Amazon’s biggest strength is sometimes its weakness, says CEO who built $1 billion business while competing against Amazon (ANGI, AMZN)

Category: Home Tech
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Back in 2014, Amazon did what Amazon does, and launched a completely new business called Amazon Services, a marketplace for finding home and business professionals, directly competing with Angie’s List and HomeAdvisor.

By 2015, Angie’s List was struggling. Growth had stalled and quarterly revenues declined, the stock price crashed to a low of $3.73. By the next year, with no real growth in site and the stock hovering in the mid $5, Angie’s List accepted a buyout offer from its hated rival, HomeAdvisor, and in late 2017, the two companies merged.

During that same period, HomeAdvisor was also competing against Amazon, as well as its better known rival Angie’s List. And it was thriving, CEO Chris Terrill tells us.

Between the years 2010 and 2014, before Amazon entered the market, HomeAdvisor had about 6 million service requests per year, Terrill says. In 2015, after Amazon, service requests increased about 50 percent to nearly 10 million and revenue had grown to $297 million. It continued to grow around 35 percent per year for 2016 and 2017.

Since buying Angie’s List and renaming the company ANGI Homeservices, the combined company has hit $255 million in revenue in its first quarter of 2018 alone, which puts it on track for $1 billion in revenue for the year. And the stock is up to about $16, giving it a $1 billion valuation.

Amazon was also growing its home services unit during this time, but it’s hard to tell by how much. Amazon doesn’t break out the unit’s revenues or regularly report on it. In 2017, Amazon said that Home Services was available in 50 cities, offered over 1,200 services from providers across 60 professions, and that customer orders grew more than 200 percent.

Terrill tells us that the secret to competing against Amazon is the personal touch, especially with suppliers — in his case the workers/professionals.

“A lot of those tech companies have an uber-tech point of view that says, ‘We’ll just do it through tech. We don’t need a salesforce. We don’t need an ops team.’ And then they get the rude awakening, which is, ‘oh, they don’t just sign up for their own through self-serve, they don’t just know how to use the platform, they don’t just do this on their own.”

He adds, “I don’t care how big you are. This is one of those marketplaces where lots of dollars isn’t it. It’s time. It’s so hard to get service providers. It’s hard to get them on platform, then to get them to use the platform. You can’t imagine how hard it is to get the sole proprietor roofer to pick up his or her phone on the roof.”

ANGI Homeservices CEO Chris Terrill
Wikipedia/Lhogan2

Terrill says that a tech company like HomeAdvisor naturally has to have the tech: the algorithms, the apps, the ability to background check and screen and the self-service. “But we also have a large sales force and a large sales team.”

Like a father rooting for his child, Terrill believes that his particular market, home services, is an especially hard one for an Amazon or Google to crack because “like dating” two people can “see things differently” and when a dust-up happens between the home owner and the service pro, the marketplace has to be able to step in and mitigate.

It’s also not a volume and scale thing. Each project has its own factors that contribute to the cost of the work.

But despite his clearly nonobjective point of view, Terrill makes a good point.

Self-service at scale has been Amazon’s greatest strength. But it can be Amazon’s weakness whenever a human touch is an asset, not simply an expense.

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