Google Looks to Take On Amazon Prime
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."
- Google Targets Amazon’s ‘Prime’ With 1-Day Delivery – The Wall Street Journal
- Google Prepping Answer To Amazon Prime? – Information Week
- Google prepping an Amazon Prime competitor: reports – econsultancy.com
- Watch Out Amazon: Google Looking to Venture into Delivery Services – Time
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?