Market Overview

Two Companies Amazon Could Challenge With New Local Marketplace Offering

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Shares of Angie's List (NASDAQ: ANGI) moved lower Tuesday afternoon following a report from Reuters that Amazon (NASDAQ: AMZN) will be launching a local marketplace.

According to the Reuters report, Amazon has been reaching out to small businesses in a test market to find a way to include the company's services.

Although Angie's List moved on the announcement, two companies that many expected to move did not: Groupon (NASDAQ: GRPN) and Yelp (NYSE: YELP).

A local marketplace would add an additional layer of competition to Groupon's offering. Amazon already has a local business coupon service in Amazonlocal -- a direct competitor to Groupon which has been eating away at the company's market share. The ability to combine the existing Amazonlocal with customer reviews and Amazon's expansive reach is likely to further erode Groupon's leading position in the space.

Amazon has reached into the business services industry with Amazon Web Services, which have been widely popular. If Amazon can build relationships with small businesses, it may be able to steal some of Yelp's services market share; especially given Amazon's previous experience with web services. In addition, with the massive number of users on its platform, Amazon could build an expansive collection of user reviews, competing with Yelp's front end offering.

Shares of Angie's List dropped 1.29 percent to close Tuesday's session. When word of the report was first heard, Angie's List shares sold off 4.93 percent.

Posted-In: News Rumors Trading Ideas

 

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