You might have heard the news of Amazon’s free ‘smart home consultation service’ that was recently launched in the US. Simply put, Amazon is offering a free in-home consultation from a trained expert to assist potential customers with choosing the right connected home products for their needs. Because of Amazon’s unique position in the market, I believe this could seriously drive the connected home market and give Amazon a leading position.
So why am I so impressed by what Amazon is doing? What allows them to offer free in-home consultations? And why are they so well placed to both drive and gain a large part of the connected home market? Here are five reasons behind my thinking:
1. Clear strategic commitment and vision
To begin with, Amazon’s decision to develop a voice-controlled home assistant for the connected home was a bold move. With the success of the Echo product (reportedly more than 10M sales in the US), Amazon is now fully committed to the market. Offering a free in-home consultation is their next big step in trying to raise awareness of the connected home and move it from niche to mass market. And by doing so, gain a significant share of the value within this market.
2. A market leading product and brand
Amazon has in its hands the hottest connected home product in the form of Amazon Echo. Sales so far show that there is a strong customer demand for the product. On the back of this, the company should be able to attract a large number of people to use the consultation service. Also, being viewed as one of the most innovative companies in the connected home market positions Amazon as a credible expert to advise customers about these products.
3. Both a product provider and a retailer
The obvious benefit of the in-home consultation is the opportunity for Amazon to sell its connected home products (Echo, Fire Stick) and, maybe even more importantly, upsell the Amazon Prime subscription service. However, even if the customer chooses products outwith of Amazon’s own product range, Amazon will get to keep their margin on the sale. Furthermore, strengthening the customer relationship helps Amazon establish itself as the go-to retailer for connected home products.
4. Logistical capabilities to provide such a service
The competing technology giants of Apple and Google do not have the logistics capabilities to offer a similar service. Amazon has already been offering home services such as installation, home cleaning, and computer repair in the US so providing a free smart home consultation has limited cost implications. For most of Amazon’s main competitors setting up a service force would be a major step.
5. Deep pockets
All of this is made possible by the scale of Amazon’s core business. Amazon does not necessarily need a quick return on investment – it can afford to invest in expanding the overall market as it has a strong position in the product, retail, logistics and potentially service parts of the value chain.
Will this move cement Amazon as the leader of the Connected Home market? Is Amazon going to win the battle for the connected home?
I think it is too early to tell and of course there won’t be a single winner. But I believe this move will further separate Amazon from the pack as the leading connected home brand in the US – in the voice control market, the connected home retail market, and potentially the service market. Importantly, I believe the consultation service will increase awareness of the connected home as a whole and will therefore grow the overall market. What remains to be seen is how Amazon’s competitors, both in the US and Europe, will try to respond.
What do you think? Do you think Amazon’s new service is going to disrupt the market?