Google’s new Shopping Express and the risk of online partnerships
A recent article in RE/CODE got me thinking about the caution retailers must take when signing up with online partners.
Apparently Google has launched an all-out effort to combat Amazon in product search. As Amazon has added more information, product reviews and independent sellers to its website, it has become not only the place to buy products but the choice place to research them. Capping all this is the famous (and patented) One-Click feature for fulfillment.
In response, Google has created a localized online marketplace, Google Shopping Express, which delivers products to consumers from local retail locations. Google promises to deliver products picked up at retail locations to the consumer within specified time windows. In Manhattan, Google’s new service still seems to be dominated by national chains — Target, Costco, Walgreens, Staples, etc. — but they are asking consumers to let them know about local retailers. Google allows consumers to shop by store and category, but also warns that all items might not be available at a particular outlet. All in all, it seems a little cumbersome to me and it is only available in a few locations. Then again, Google is just getting started.
Whether it is Amazon or Google, the retailer who decides to partner with one of these services has to think long and hard about the impact on their relationship with the consumer. During its "Amazon Rising" documentary, CNBC interviewed suppliers who used Amazon fulfillment services and complained Amazon cherry picked their best sellers to carry themselves. In the case of Google, without any store visit, does the consumer really think they are dealing with the retailer or buying from Google? Does the retailer risk losing the customer’s loyalty?
Discussion Questions
What are the pros and cons for retailers partnering to sell through Google or Amazon? Does using online marketplaces as intermediaries place customer relationships at risk for retailers involved? Does either Google or Amazon provide a better selling tool for stores?
The obvious one is that the consumer will see it as an Amazon or Google offering and that the individual retailer won’t get proper credit.
As to the second question, the answer may be yes or no, depending on the retailer in question. It’s possible, for example, that Amazon and Google might be better at customer service and/or service recovery than a local merchant.
The final question probably needs to be evaluated on a case-by-case, deal-by-deal basis. I think it’s dangerous to generalize.
As a consumer who does a significant amount of online shopping, I trust Amazon ,and truthfully I really don’t care where they get the products from. I also think there is a sense of security in terms of credit card fraud—I assume that they have better security in place, as opposed to me contacting some random retailer.
Google and Amazon (and eBay) are digital super-aggregators building on their reputation and trust to bridge online and physical retail. As such, they become the retail face to the consumer while retailers feeding these super-aggregators become suppliers. Retailers get access to more customers, but lose the traditional interactions with them and the relationship shifts to Amazon and Google. Alternatively, if the stores are able to position Amazon and Google as their delivery service and actively follow-up directly with their customers, they can maintain that key relationship.
As to which provides a better selling tool, it’s really up to the consumer and their comfort and experience with each. From a store’s perspective, each will decide based on their specific circumstances and perceived benefits, and the actual service execution in their specific metro area. The angle here is convenience: it’s reliable same-day delivery from local merchants to my home or business. Execution will be key.
The odd reality is that Google is the better option for national retailers as the Google interface essentially creates a branded hub for participating retailers (the retailer’s ID is by no means masked or dominated by Google), yet the clear winner for shoppers is Amazon (thanks to Prime, robust reviews, clear delivery expectations and plain old familiarity with the platform).
I’m amazed that there are enough shoppers out there who are organized enough to do their household shopping online. Unlike them, I usually wait until I run out of laundry detergent and have a mound of laundry piling up before I put it on my list. Then I’ll pick it up on my way home from work, so I can have clean clothes the next day. It’s a matter of convenience.
Most shoppers gravitate to what they find most convenient. Amazon has made headway because they have streamlined online shopping for a broad base of customers. Loyalty to specific retailers doesn’t play a big role in this scenario, because shoppers see themselves as shopping at Amazon. is that any different that saying that you shop at the local mall instead of specific stores in the mall?
Can Google brand themselves as successfully as a single-source retailer? Only time will tell.
Partnering with Google or Amazon, or anyone else for that matter, brings an implied endorsement—at least in the consumer’s mind—of everything that partner does, from data collection to market manipulation. Anybody buy a Hachette book from Amazon recently? Partnering can be very beneficial to the retailer, but never forget partnering can also be a two-edged sword.
A retailer partnering with a web giant exposes the retailer directly to customers who are shopping for a product they have to sell. This cuts out a great deal of effort and expense versus designing and maintaining your own website. Handled properly, I can’t see how customer relationships can be put at risk.
I think Amazon provides a much better alternative because Amazon is a proven seller. Google jumps from this to that and doesn’t seem to focus on anything for long. I have been waiting on Google’s “blackwire” for years. Typically they make a great splash about ultra fast internet and rewiring the USA, but they get to Kansas City and just become another alternative to the cable guy and AT&T. No expansion no plans—typical Google. After the flash dies out it’s on to the next world shattering project (Google Glass, Google Groceries, etc). Amazon provides a platform that is flexible and does what the seller wants. Additional services are offered, but not mandated.
In the consumer’s eyes, Amazon is trusted and proven at online buying. A shopper might not care whether the product is Amazon’s offering or a third party seller, but they figure that some sort of vetting has taken place and that it is a legitimate deal. Google, on the other hand, is not as proven in this regard and most people would think of them as a technology company more than anything else (although not to discount the potential of them figuring this out).