Amazon heats up competition in home services sector

The home services business is sizing up to be a more than $800 billion industry and competition is heating up. While Google is reportedly working to stake its claim, Amazon is already on the scene with a huge advantage over its small business counterparts: customer data.

"Amazon can link it to your product history, right? So if you've just bought a piano, it will promote sheet music to you, it will promote piano tuning to you," NewYorker.com editor and CBS News contributor Nicholas Thompson said Thursday on "CBS This Morning."

10 smart home features buyers actually want
10 smart home features buyers actually want

Amazon Home Services launched in November and is available in 30 cities so far. As they've done in the past, Thompson said the e-commerce giant is using algorithms to anchor itself in the industry.

"Amazon is basically trying to find every market in the world where it sees some inefficiency caused by humans and then take the humans out of that and replace them with robots -- or replace them with computers," Thompson said.

It helps customers find and hire people for everything from home improvement needs to music lessons. Buying a T.V.? For just over $100, Amazon knows a handyman to install it.

"Here, you can't replace actual plumbing with computers, but you can replace the process of finding the plumber, making sure the plumber is certified, and getting a rebate if the plumbing thing doesn't work," Thompson said.

In February, Amazon CEO Jeff Bezos said his company is focused on investing in the next big thing.

"What seems to happen is that startups go into something and then they have a couple of years and then get really, really big, like say, Uber, then they're too big for one of the big companies to get in and crush them," Thompson said.

Thompson said that didn't happen in the home services industry -- a welcome mat for Amazon.

"Amazon tends to drive people out of the market, which usually would increase prices, but Amazon, their whole culture is to decrease prices, so Amazon is very good at getting us stuff for not a lot of money," Thompson said.