Google Looks to Take On Amazon Prime

Discussion
Dec 05, 2011
Tom Ryan

Google is reportedly in talks with Gap, OfficeMax and Macy’s on an alternative to Amazon’s Prime two-day, shipping service.

According to The Wall Street Journal, Google’s fee-based service will be an extension of its Product Search comparison service that would let retailers include their goods for same-day or one-day delivery with free or low-cost shipping. For brick & mortars, deliveries would ideally arrive much quicker from a local store versus an out-of-state distribution center.

According to the Journal, "The quick-shipping service would be based on Google’s behind-the-scenes system that allows shoppers to figure out whether nearby stores have a product in stock and whether they can get that product shipped to them within a day. When shoppers place an order on participating retailers’ sites, Google’s system could kick in to offer them the option of same-day or next-day delivery."

The service is expected to launch in 2012. With the recent launches of Google Books, Google Music, Google Offers and Google Wallet signifying Google’s desire to become a more prominent retail player, the delivery service may be necessary to challenge Amazon’s e-commerce supremacy, according to some observers.

It was unclear whether Google would get a cut of sales. But many analysts and tech bloggers assumed the core benefit would be improving click-through rates to bolster Google’s search engine advertising revenues that are reportedly being affected by Amazon. Consumers are said to be increasingly bypassing Google’s search engines and shopping directly at Amazon, partly due to the retention loyalty created by Amazon Prime.

Amazon Prime lets consumers pay $79 a year for unlimited, free two-day shipping. The service also recently added unlimited streams of movies and television shows as well as free borrowing of e-books from Amazon. On Information Week, Thomas Claburn wrote, "Evidently, Amazon’s lesson about the mental lock-in created by ‘free shipping’ has not been lost on Google."

But many see huge hurdles.

Forrester Research analyst Sucharita Mulpuru told the Journal that Google’s move would be "ridiculously expensive" because shipping costs would have to be subsidized by Google. Amazon can also offer the whole order in a single shopping cart while Google’s service would include shopping carts for each retailer.

Overall, many doubt if Google could ever measure up to Amazon’s delivery expertise. Writing for econsultancy.com, Patricio Robles called delivery "one of the toughest parts of online retail."

Mr. Robles also said retailers will have to assess whether Google will be a reliable partner and whether outsourcing delivery would only hurt their customer loyalty if shipping problems ensue. Wrote Mr. Robles, "Savvy retailers would be wise to think long and hard about these questions before they decide to get involved in Google’s fight against Amazon."

Discussion Questions: Is offering a competitive delivery option necessary for Google — as well as for other retailers — to compete with Amazon? Should retailers be exploring Google’s delivery service? What challenges do you see for Google in offering the service?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

14 Comments on "Google Looks to Take On Amazon Prime"


Sort by:   newest | oldest | most voted
Peter Fader
Guest
9 years 5 months ago

I see this as a “bridge too far” for Google. It’s great to see them try it (what do they have to lose?), but I can’t imagine that they can pull this off very well. The logistical challenges for this kind of service dominate the informational ones, and they’re ill-prepared to handle them.

The announcement made no sense when I first read it, and further reflection only makes it seem even worse.

Paula Rosenblum
Guest
9 years 5 months ago

Amazon Prime is like crack. Once you know you can get almost anything without shipping costs, it becomes so easy to just go right to Amazon. Ironically, Amazon has also gotten very good at optimizing where it shows up when you just google a product. So one thing Google will have to do is get its retailers up in the search engine rankings without damaging its credibility as the best search engine.

I never count Google out of anything. The company is willing to give most anything a try…and it succeeds more often than it fails, and more spectacularly. I think it’s smart for retailers to explore all their options, but somehow I’ll bet they know that already. 🙂

Lisa Bradner
Guest
Lisa Bradner
9 years 5 months ago
As my former colleague Sucharita points out, the devil is in the details of how the distribution, pick, pack and ship all come together. I won’t pretend to be deeply knowledgeable about how Amazon does it, but multiple packages coming from individual stores does have to be more costly and less efficient than a single point of distribution. That being said, I think Google has to embed itself more deeply into the shopping experience. Search is changing and people do increasingly search within a brand (Amazon, Facebook) vs. the whole world wide web. Ultimately I believe we’re overwhelmed by too much choice and need partners who can help us curate. If Google can use the data it collects to better customize and curate the shopping experience they can be a leader in the curation space. Given that, I think in the long term it will be less about interrupting the shopping cart within a retail site and more about Google creating their own shopping cart pulling from different stores and brands. What is intriguing to… Read more »
Bill Emerson
Guest
Bill Emerson
9 years 5 months ago

It’s an interesting idea. Will Google, whose DNA is about search, be able to compete with Amazon, whose DNA and history is about shortening the time cycle between finding a product and getting it to the customer quickly? Seems doubtful. What’s that line about sword fighting with Zorro?

Gene Hoffman
Guest
Gene Hoffman
9 years 5 months ago

I have come to oogle almost anything from Google
But to compete with Amazon deliveries appears a sham.

Herb Sorensen
Guest
9 years 5 months ago
In the interests of competition improving nearly anything, I wish Google well. But, so far, I much prefer to find the product I want either sold by Amazon directly, or through an associate. This is not always possible, particularly with things like obscure electronic components, in which case it’s off to Google. But the experience is ordinarily well less than desired. The problem is not so much with Google, per se, but the irregular gaggle of suppliers — but then, maybe that’s a consequence of the class of trade that remains after filtering through Amazon. A closely related issue, for me, is payments. I may be wrong about this, but I typically think that anyone whose accounts/identity is specifically targeted by the “wrong” hackers, is probably vulnerable. Which means I basically trust organizations much larger than me, and with a lot more at stake, to handle the security battle for me. Again, I have no hard facts on this, but I tend to think Amazon has had a lot more at stake in the security… Read more »
Phil Rubin
Guest
9 years 5 months ago

The merchants Google hopes to attract with a Prime-esque offering need something to better compete with Amazon so this will not hurt at all. It’s likely that Google will bundle this with advertising commitments and use it to drive a deeper wedge with its merchant clients, and ultimately integrate with its Google Wallet.

Two other considerations not yet mentioned in the discussion:
1) Amazon has a significant cost advantage which we know from the challenges Walmart is having trying to compete with it.
2) There is enough business that Google will be successful even if it doesn’t put a huge dent in Amazon’s business. The trend, as we clearly see from Thanksgiving-related sales, is towards online commerce and ultimately a lot of that growth is going to come at the expense of brick-and-mortar. Time famine isn’t going away so the more that merchants improve their digital commerce, the better.

Andy Casey
Guest
Andy Casey
9 years 5 months ago

The real question may be whether Google can convert Prime members to its service instead. I’ve been a member of Prime from almost the beginning and use it regularly; why would I add the paid Google service to my portfolio?

The reason Prime makes sense for me is the selection (Amazon carries virtually everything) and just as importantly, the pricing for individual items is typically competitive. As others have pointed out, the logistics may be daunting, but putting together an attractive portfolio of retailers may be even more difficult.

Doug Fleener
Guest
9 years 5 months ago

I agree that it doesn’t look very cost efficient, but at the same time you never want to rule Google out. Even if they don’t get it right the first time, they often come back with a better solution.

I think the other issue is the quality of the customer’s experience. One thing Amazon Prime is consistent. They can tell me exactly when I’ll get it, and rarely if ever do they fail to meet my expectations.

Now try to duplicate that experience across multiple retailers, but even more challenging — having it shipped by the local store. Yikes.

W. Frank Dell II
Guest
9 years 5 months ago

The challenge does not appear to be online shopping with one e-tailer, but with multiple e-tailers. The ability to combine different purchases into a single shipment is a significant cost saving. Both FedEx and UPS have invested heavily in home delivery infrastructure. By providing an electronic mall and one shipment, Amazon is offering a superior service at lower cost. The key to success is grouping retailers with like customers.

Bill Bittner
Guest
Bill Bittner
9 years 5 months ago
I have always found it difficult to categorize Amazon; are they a retailer with good technology or are they a technology company who operates an online store? In either case, they also have a world class (literally) fulfillment infrastructure. I agree it would be difficult for Google to duplicate the Amazon fulfillment process. I also believe it is this process that has been Amazon’s strength. But as the world moves further away from brick and mortar to embrace online shopping, fulfillment is becoming a commoditized service. Third party logistics companies are providing fulfillment services for many independent retailers and manufacturers. Google could very well contract out these services. But it is not only the outgoing services that attract consumers to Amazon. Many people would not shop online if it weren’t for the fantastic returns process that Amazon supports. I have personally never used it, but I have had many people express their satisfaction with the “no hassle” return policy. This may be a challenge for Google if they are using independent service providers. I don’t… Read more »
Gary Chatman
Guest
9 years 5 months ago

The “last mile” comes into view. A competitive delivery option is necessary for all retailers. Surveys show 45% of shoppers look for delivery options prior to shopping. The challenge is one-hour, same day.

Ed Dunn
Guest
9 years 5 months ago

A more accurate comparison would be Google versus Walmart Site-to-Store delivery. The exception is Google’s offering appears to be decentralized and all it takes is one bad partner to poorly deliver the product.

Another concern of mine is who is going to pay for the fuel cost of delivering all these orders from store to store?! That is very expensive!

Ed Dennis
Guest
Ed Dennis
9 years 5 months ago

Google is cursed with billions of dollars and nothing to do! It’s looking every possible avenue for expansion. I would encourage them to think about what they are possibly doing that will add value for the consumer. Making retailers happy will accomplish absolutely nothing and ensure failure. What more can Google do for consumers than Amazon does? Maybe Google should think about used cars.

wpDiscuz

Take Our Instant Poll

How much of a competitive advantage is Amazon Prime for Amazon?

View Results

Loading ... Loading ...