Goliath, Inc.

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Amazon is now one of the world’s largest suppliers of all-the-things, and its Home Services marketplace is selling pest control, too. What does that mean for your business?

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November 7, 2019

Search, click, buy. Repeat.

The sheer simplicity and vast access to products and services offered by behemoth Amazon is neatly wrapped in a user-friendly package that makes doing business easy. You just search, click, buy — and the more you repeat, the more attractive that “buy” becomes in the Amazon Marketplace. As professionals in the pest management industry know well, recurring revenue and repeatable services have great value.

The question is, how marketable is pest control as an Amazon Home Service, anyway? And, as a $10-billion top-20 distributor in the world — with its B2B services growing 20 percent every month — is the online retail megastore a new competitor, a potential supplier, an opportunity or a threat?

Or, is Amazon all of these things?

Ian Heller is president of Modern Distribution Management (MDM.com), a market research and media company that studies Amazon to provide intelligence to wholesale distribution executives. “Amazon is one of the largest distributors in the world, and they are clearly focused on the business-to-business market, and we’ll see what role services end up playing in that,” he says, relating that for now, most of Amazon’s B2B movement is in the products sector. “But, Amazon is focusing on every type of business,” he points out.

Take the metal industry — seems an unassuming target for Amazon. “You wouldn’t think the metal industry would be susceptible to Amazon, but look — there are hundreds and thousands of SKUs today for metal on Amazon Business,” says Alex Moazed, co-author of Modern Monopolies and founder/CEO of Applico, a New York City-based platform innovation company that helps brands stand up against (or leverage) players like Amazon.

If you’re a distributor looking for commoditized products or services, “Why not explore Amazon?” Moazed says.

Is pest control a service that could be commoditized under the Amazon Home Services white label? What about PMPs obtaining products on Amazon? The agriculture and specialty chemical industry is highly regulated, and Amazon already has been burned by an infraction. But, Amazon has a way of making what seems impossible a reality.

“Amazon is always testing,” says Jason Roussos, founder/CEO, Directional Cue in Austin, Texas. His firm, an Adlucent company, integrates online sales channels with marketplace like Amazon.

CONSUMER THEN B2B. Heller spends lots of time analyzing Amazon job descriptions. One he found interesting: “We believe the best shopping experience in B2B is no shopping at all.” Heller says, “In other words, shopping is not recreational — it’s business. So, if you can take the shopping out, then you increase efficiency and that’s what businesses want.”

However, Amazon traditionally goes after the consumer first, testing the waters in this market and then rolling what works over to B2B. If it works for Joe Homeowner, why not move on to Bob Business? “Amazon tends to trailblaze on the consumer side, then B2B follows,” Moazed affirms. Case in point: The marketplace platform known for home products and, now, groceries represents a business opportunity for Amazon — and potentially, its business users.

“Marketplace business models rely on regular, repeat interaction, and they are horizontally generalized so the marketplace offers whatever you need,” Moazed says.

Today’s Amazon Business landing page advertises that it’s, “Everything you love about Amazon, for your business.” It’s free to open an account (of course). And, if you want Business Prime, you’ll pay an annual fee of $179. (Sound familiar, Amazon Prime consumers?) The compelling offer: Find What You Need. That means anything from “hundreds of millions of products” to “business-only products” and “purchasing system integration.”

Amazon is even becoming a launchpad for new businesses to sell products without costly, complicated marketing to get a new product out into the world. Moazed shares that the company Anker, an electronics business started by a former Google engineer a few years ago, created an Amazon Product Page to sell its lines of speakers and charging devices. “They launched the product by using Amazon, and within three years, they’re doing more than $1 billion in sales,” he says.

“If Amazon has circumvented traditional distribution channels, which is literally what they are doing, and I am a chemical product manufacturer, I now have greater access to the end-customer,” Moazed suggests. “I can create new products and more easily compete with larger players that have traditionally dominated the industry.”

While Amazon has stepped into the highly regulated pharmaceutical industry — proving that there’s no market the Goliath won’t touch — there’s been little impact on the professional pest management industry thus far.

“There are a lot of companies, not just Amazon, that think they can replace relationships with technology, and when you are dealing with pharmaceuticals or agro-chemicals, you can get into a lot of trouble doing that and face regulatory repercussions and lawsuits for selling stuff that you shouldn’t be selling to people who shouldn’t be using it,” says Lon Records, CEO of California-based Agri-Turf Distributing.

National Pest Management Association’s (NPMA) Dr. Jim Fredericks acknowledges that online sales of pesticides triggers problems, including Restricted Use Pesticides (RUPs) to products registered for sale in multi-packs being opened and sold individually. (It compromises labeling and packaging.) NPMA advocates that all pesticides sold on the internet be held to the same legal standards for selling and distributing and that all labeling, packaging and branding meet FIFRA regulations.

Robert Percy, director of operations, Gardex Chemicals Ltd., Ontario, Canada, says, “Amazon isn’t a threat to our business here, but there are numerous issues that affect the sales of pesticides in Canada that haven’t been fully addressed.” First, you need a vendor license to sell them, and a licensed dispenser on site at all times. (This is required by each Province, Percy explains, so you’d need 10 licenses to sell in Canada.) “Throw in requirements such as, ‘no pesticide can be shipped with food or feed,’ making it impossible for Amazon to deliver via UPS or post.”

But, it does happen. “We still see illegal shipments in Canada and numerous (products) coming across the border from DIYs or Amazon,” Percy says. “It’s illegal, but the government doesn’t have the resources to control it. Though, most PMPs will not try it because a few were caught illegally importing unregistered product and fined $5,000.”

Amazon is still blazing a trail.

Search for “rodenticide bait” on Amazon. Pages and pages of results turn up. Now, search “cockroach gel bait.” Again, pages of results. Chemicals used for treating pest problems are readily available for purchase on Amazon.

Not particular to selling chemicals, but in general, Moazed says Amazon is not holding back on its entry into distribution channels, and it is gaining traction in some markets. “Nothing is going to stop it,” he says.

AT YOUR SERVICE. In 2015, Amazon launched Amazon Home Services, targeting the B2C market and creating a platform for Amazon Business “sellers” to reach customers who are searching Amazon for things they need, such as housecleaning.

“Amazon Home Services is really targeting the consumer at home,” Moazed says. “Amazon wants to control the home — they want to control not just the products you buy for your home, but the services.”

This is evident from Amazon’s acquisition of Ring, the “smart knock.” “Now, the Amazon guy delivering your packages can get into your home to make sure those packages don’t get stolen. And, if you think about service providers coming into the home, and Amazon controlling that and being that gatekeeper, it’s a natural evolution.”

Amazon is in partnership with Lennar to provide home services; Lennar is one of the largest apartment and home construction developers in the country. Also, Amazon bought Whole Foods so it can be in the grocery market. When Amazon Home Services first launched, it partnered with Handy. Moazed notes, Handy is no longer a partner in that capacity, and instead has partnered with Walmart and others that also recognize the value of this Marketplace/Home Services world.

Service providers who participate in Amazon Home Services set up an account, and the process is pretty simple, Roussos says. Though, he says the platform right now, “is still pretty clunky. They don’t have a wide selection of businesses, and they don’t have a lot of people using it at this point.”

Knowing the Amazon machine, this slow start will accelerate.

“The biggest area we are seeing Amazon get market share is in the cleaning space,” Roussos says. “But, other areas like pest control are growing.”

Again, the key to being an attractive Home Services seller is repeat services. And, while pest control is a typically a quarterly offering, it’s not a weekly gig like buying groceries or getting your house cleaned. “You really want that weekly interaction,” Moazed says. “At a baseline, you want monthly interaction.”

As a service provider with Amazon Home Services, you give up your brand. Your name on this platform becomes Amazon Home Services. And, you’ll give up a slice of the profit, too. But, a positive could be getting new accounts, Roussos says. “Statistically, Amazon owns about 60 percent of all new product search online, so the reality is, consumers are on Amazon. The eyeballs are there. So, from a new customer acquisition perspective, you’ll have access to new customers more rapidly because that is where the average customer is shopping.”

But, is the Amazon consumer an ideal potential client for a pest control company wanting to build a long-term relationship with customers?

Records doesn’t think Amazon is a contender for reputable pest control businesses, or that its B2B distribution will interrupt the industry’s traditional pipeline. “Technology, to a certain extent, can help you — but you can’t rely on a website to make sales calls for you,” he says.

Roussos sees little risk to offering services through Amazon Home Services. “You can learn from it and find out, ‘Is there volume here? Is Amazon really moving into my space, or is this something to not be concerned about?’ Any business needs to be aware of Amazon, and the closer you are to Amazon, the more you learn.”

PERSONAL RELATIONSHIP. A human relationship is one thing Amazon can’t provide (for now). Many PMPs and distribution experts like Heller agree that, “Right now, personal relationships matter a lot, and salespeople are still important.”

But, Heller says, “Amazon is testing how much it can weaken the value of personal

relationships.”

Aside from product and service knowledge — expertise — salespeople and owner/operators will need to keep up with technology. Amazon is setting the bar, and consumers will expect the same conveniences no matter where they shop for products or services. One expert’s advice: “At a minimum, play defensive.”

Millennials are becoming a larger part of the workforce than any other generation. “They are less interested in building a personal relationship with a salesperson and more interested in building a relationship online, and ordering products and services online,” Heller points out.

Salespeople, and business owners, in any organization should evaluate how they provide value. “They can’t just go in and bring the donuts,” Heller remarks.

Aside from product and service knowledge — expertise — salespeople and owner/operators will need to keep up with technology. Amazon is setting the bar, and consumers will expect the same conveniences no matter where they shop for products or services.

Roussos’s advice: “At a minimum, play defensive.”

Be aware of the evolving distribution market and how consumers shop. “Business services are still a small percentage of what Amazon is doing, but they are prioritizing it,” Roussos says.

Heller references Alexa for Business, which provides voice-ordering capabilities. “You can say, ‘Alexa, get me toner for the printer,’ and it will figure out what you need and order it for you,” he says. “The ability to order without shopping is important to [Amazon].”

In a presentation Heller gave on the subject, he said, “Amazon envisions Alexa as the all-knowing product expert that is connected to the store that sells everything.”

Heller adds, “That’s very ambitious.”

Ambitious is Amazon.

PMPs are level-headed. They are often cautious about technology and seem innately skeptical about whether Amazon is a player in the pest control industry. As Records says, “The biggest competitor you have is yourself. The second biggest competitor you have is your own organization. And the third, distant competitor is the people or companies that do the same thing you do.”

The author is a frequent contributor to PCT.