The Uber-ization of Local Commerce

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uber-logosLast week, ReachLocal took its new commerce platform for home services, ClubLocal, off of its training wheels, expanding the program into the Bay Area. Pitched as an Uber for home services, the company aims to create a self-service platform to facilitate the booking of home repairs and plumbers — but its execution overlooks some of the dynamics that make some industries, like taxicabs, more fitting to the model than others.

A vending machine is a an Uber for softdrinks…
The “Uber for X” pitch has become the term du jour in local. But what does that mean?

At its core, Uber is a self-service platform for cabs. And with self-service models like Netflix (and, yes, vending machines), it’s all about automation. The consumer needs to have a clear expectation of the quality and price of a product or service, and then the technology needs to be in place to ensure that said product or service will be delivered. Think of a vending machine.  There’s information about the soft drinks on each button, which is qualified by the reputation of the brand; the price is pre-set; and when you put a dollar in the machine a Coke immediately pops out at the bottom.

Overall, it’s a harder nut to crack with services. The human element implicit in a service introduces a degree of variability that makes automation a bit more difficult.  That ranges from industry to industry, making the model more difficult to apply to certain industries than others. Borrowing from Mike Ghaffery’s exceptional framework for identifying an offline industry’s susceptibility to e-commerce disruption, let’s use three factors – the ability to standardize the content, automate pricing and transaction, and manage a speedy delivery of said service – to determine an Uber-coefficient, or the probability that a company can successfully create an Uber for a given service industry.

So let’s compare the taxi industry with the home services industry:

Pricing is an issue
For ClubLocal, and other companies looking build an self-service model for home services, pricing is a problem. The custom nature of most home local services necessitates the sort of case-by-case pricing structure that’s in place today. Without pre-set pricing, it’s difficult to created the automated purchase flow (find, buy, redeem) that makes a self-service platform valuable to both the consumer and merchant.

It’s a lesson that Ethan Anderson knows well. The chief executive at MyTime and founder of RedBeacon, which Home Depot acquired last year, spoke about the challenges of building an self-serve model for home services in a March 2013 interview with Street Fight.

“Redbeacon had a challenging conversion funnel, in my opinion,” Anderson told me about his earlier project. “The user requested a service, then had to wait a day or two to receive a bid. A lot could happen in the meantime — maybe you got impatient and called the business on your own.” That’s why in his newest venture, MyTime, the company only sources fixed-priced, and fixed-variable services like haircuts and dental cleanings, said Anderson.

Abetted by the growth of mobile devices, self-service platforms will transform the way we buy some goods and services locally. For certain industries, like taxis, a startup like Uber will disintermediate key parts of the market  (dispatch companies), while in other verticals like restaurants, companies like Seamless will improve an existing workflow. The more change it introduces, the greater the friction and larger the reward.

For a  vertical like home services, however, where a self-service model requires providers to fundamentally change a key aspect of their business in pricing, the friction might be too much. One day, when our homes are layered with sensors, and every inch of a property is digitized, we might be able to automatically price the rebuilding of a porch. Until that problem is solved however, products like ClubLocal may be fighting an uphill battle.

Steven Jacobs is Street Fight’s deputy editor.