Amazon.com, Inc. (NASDAQ:AMZN) has also hopped into the largely lucrative business of after-sales services. The company especially seems interested in getting the business rooted fast enough to benefit from this festive season shopping. Now is a time when millions of children are at home, and families need to get a few more technical issues fixed on their gadgets to give children the best holiday at home. However, in its plunge in the services business Amazon declares a contest against Best Buy Co Inc (NYSE:BBY). The electronics retailer already earns a significant amount of profit from that segment, according to TechCrunch.
Best Buy acquired Geek Squad from Robert Stephens, and it is one of its highest margin businesses. In fact, analysts have described Geek Squad as being a cash cow for Best Buy. The business generates margins of up to 50% on annual minimum revenue of $2 billion. It is no doubt that the profitability of the services business has attracted the attention of Amazon.com, Inc. (NASDAQ:AMZN). Many other startups have also recently tapped into the after-sales services business.
For Amazon.com, Inc. (NASDAQ:AMZN), its already successful marketplace is expected to boost its services business. According to experts the acceptance rate of services is higher when a customer has just purchased a product. That makes bundling services with products a good idea.
Amazon.com, Inc. (NASDAQ:AMZN)’s services marketplace will list alongside the products to offer better visibility. The service marketplace is also expected to boost sales and also create jobs for specialists. However, Amazon’s version of service marketplace is also expected to come with a fair amount of challenge for the e-commerce giant. Experts have cited that having a plethora of service providers on the marketplace can end up overwhelming customers, which in turn can frustrate the business. It is cited that customers like picking from few options.
Nonetheless, the after-sales services marketplace is a great idea for Amazon.com, Inc. (NASDAQ:AMZN). It comes at a time when the company is apparently trying to boost its revenue base in the market that is increasingly becoming competitive. It remains to be seen what becomes of the after-sales services marketplace with Best Buy and Amazon in it.