Now Google Go Head to Head with Amazon Home Services

Now Google Go Head to Head with Amazon Home Services. It will all end up as a price war for window cleaners.

Google to go Head to Head with Amazon Home Services: Later this spring, Google is expected to officially launch its online, on demand home services site, comparable to the recently launched Amazon Home Services as well as Angie's List, HomeAdvisor, and Thumbtack. Currently available for finding car insurance, Google Compare may become the location-based evolution of Google Places as the platform for connecting searchers with local services in their area.

Google Follows Amazon Into Home Services: Google's ambitions are virtually limitless: curing death, teleportation, renewable energy and so on. Add another one to the list: fixing your clogged toilet.

Following closely behind its arch-rival Amazon, Google is planning to launch a new product connecting users with home services providers like plumbers, housecleaners, electricians and carpenters.  The move, expected to be announced within the next few weeks, is in keeping with a broader corporate strategy of "closing the loop" between buyers and sellers rather than simply introducing the two through advertising. Google Express, its e-commerce service, now serves six urban areas, including Chicago and Boston.

But for a company that prides itself on total informational awareness, the home-services market poses unique challenges. “Local services will be harder because the data’s not as transparent on what you can provide,” says Manpreet Singh, founder of TalkLocal, a startup that helps customers book appointments with approved service providers. A contractor doesn’t know how much it will cost to retile your bathroom until she goes in and sees it.

For that and other reasons, Singh expects Google to partner with companies like his rather than try to go it alone, even though it will mean cutting in another middleman. That’s the approach Yelp has taken in its own efforts to close the commerce loop, and it’s also how Amazon, which has a partnership with TaskRabbit, is easing into the home-services game.

One unanswered question in all this is how Google will square its new push with the $100 million investment it made in Thumbtack through its Google Capital arm last year. The San Francisco-based company provides essentially the exact same service Google is looking to start, connecting service providers to customers for a commission.

The apparent conflict of interests is reminiscent of the situation unfolding between Google and Uber. Google Ventures has invested $250 million in the car-service startup, but Google is also said to be developing its own ride-summoning product, a development that would put the two giants into direct competition.

Did Google Just Declare War on Amazon (Again)? Pull up a chair, and get the popcorn out… We have yet another fierce scrap between two of the world’s biggest tech giants. In the race to develop new technologies and innovations – and break into untapped, highly lucrative markets –  such scuffles are common. In August 2014, for example, Google (GOOGL) went public with “Project Wing” – a previously secretive project to develop a drone-delivery service. The revelation was a shot across the bow of fellow tech juggernaut, Amazon (AMZN). Eight months earlier, CEO Jeff Bezos had appeared on 60 Minutes to announce Amazon’s own drone-delivery ambitions – Prime Air.

Well, if the latest rumors are true, the search giant is stirring up trouble again. This time, in a high-dollar market, worth up to $400 billion per year… A Whole New Spin on “Google It” Now, you’d think that Google’s latest venture would be another cool, high-tech offering like drones. But instead, it’s rather low-tech… involving plumbers, electricians, and roofers.

There are increasing rumors that Google is preparing to expand its specialized search capabilities in order to connect consumers with local home service providers. Currently, searches for things like plumbers only return links to local contractors’ websites or contact information. Then, consumers must navigate strategically placed advertisements, as well. But Google’s new service will reportedly connect search users directly with contractors.

In other words, while a regular search just spits out a list of options and a few ads, Google will now act as a middleman and actually allow you to set up and schedule the service. In return, it’ll take a cut of the fee. Again, this is all speculation. But keep in mind that in 2014, Google led a $100-million investment in home service company, Thumbtack. So it’s obviously interested in the home services market.

Sources say an official announcement is likely to come at Google’s annual advertiser summit in May.

Coincidence? Hardly… Not even two weeks ago, Amazon launched a similar service, which allows customers to schedule home services after making purchases. Dubbed Amazon Home Services, it was beta-tested in major cities – including Seattle, Los Angeles, and New York – as Amazon Local Services. Now it’s available in 41 states and 30 of the biggest metropolitan areas in the United States, according to Peter Faricy, Vice President for Amazon Marketplace.

Say, for example, you order a new sink. Amazon will hook you up with a plumber to install it. Or if you buy a new, 60” Samsung (SSNLF) LED TV, Amazon has a guy who can come mount it on the wall for you. Amazon benefits by taking a cut (anywhere from 5% to 19%) of the service providers’ fee.

So why in the world are two of the biggest technology companies interested in such a low-tech, local opportunity? It’s All About the Money… or Is It? Although the home service market might consist of a lot of small ticket items – $150 to install a ceiling fan… $600 to clean out a chimney… they add up.

“It’s a huge market,” says Gartner analyst, Jason Daigler. Indeed. Estimates peg the overall addressable market size at $250 billion to $400 billion. To put that into perspective, the high end of the estimates is bigger than Google’s or Amazon’s current market cap!

So expanding into home services and capturing a meaningful market share could contribute substantial profits to the bottom line. At the same time, home services represent a low-risk expansion opportunity for both companies. As consumers, we clearly don’t like to go it alone when it comes to finding service providers. Consider that the likes of Angie’s List (ANGI), Yelp (YELP), Groupon (GRPN), and Craigslist already connect us directly to service providers. So they’ve validated that demand exists.

Obviously, Amazon and Google believe they can do a better job of helping us. I tend to agree, given each company’s platforms, extensive reach, and the invaluable intelligence gleaned from a near-endless supply of data on consumer habits.

But it’s not going to come without challenges…

Wanted: A Critical Mass of Contractors. The home services market is extremely fragmented and localized. Think about it: Very few, if any, national chains exist for plumbers, electricians, roofers, etc. It also lacks uniformity. Some handymen have nothing more than a truck and a sign. Meanwhile, some service companies boast fleets of trucks and technicians. Local… fragmented… heterogeneous. Add it all up, and it requires a highly customized approach to succeed. And that inevitably cuts into margins.

Even more so when we throw in additional layers of complexity and due diligence, such as performing background checks (for example, Amazon has a full-time vetting team in Seattle) and providing a platform for reviews and consumer protections for bad service. But, as I told CNBC’s Morgan Brennan in a recent interview, “If anyone can automate a seemingly daunting market via data, it’s Google.”

Above all, Google and Amazon need to get a critical mass of service providers on the system in order to make it a true benefit for consumers and a boon for shareholders. But the tech behemoths’ move into home services isn’t simply another opportunity to make money, though…

Show Me the Money: The desire to “go local” serves a much higher purpose – expanding each company’s reach and entrenching their services into our everyday lives as much as possible. And Rolling Stone thought Goldman Sachs (GS) was the vampire squid, “relentlessly jamming its blood funnel into anything that smells like money!”

Bottom line: By offering more services, Google and Amazon can keep us – and our hard-earned capital – from straying elsewhere on the web. In the process, we’ll give both companies even better data to keep serving us even more services. Talk about a domino effect. And with an entire world of consumers to go after, it’s no wonder the two companies are squaring off again in what promises to be another fierce battle.