Last month, two titans took significant strides toward bolstering their ecommerce offerings, taking aim at Amazon in the process.
ShippingPass, Walmart’s “secret weapon” to rival Amazon Prime, was unveiled May 27. On the same day, Google also announced that a buy button will soon be integrated into product ads on search results, a move many see as a direct response to Amazon’s wildly successful and friction-reducing 1-click purchasing technology.
Let’s take a deeper dive into these forthcoming services and their potential market impact:
ShippingPass will offer unlimited three-day delivery of eligible items purchased on Walmart’s website. That’s a day longer than Prime’s standard two-day window, but to make up for it Walmart is setting the annual subscription price at $50 — undercutting Amazon by half.
Not one to rest on its laurels, Amazon launched free same-day delivery for Prime members in 14 major U.S. cities the day after Walmart’s plans were revealed. It’s a huge blow that takes much of the wind out of Walmart’s sails. While the difference between two-day and three-day shipping is negligible, ordering and receiving items on the same day is a perk many consumers will deem worthy of the extra $50.
Still, ShippingPass is a good (though somewhat late) step in the right direction to address the needs of today’s ecommerce consumer, whose priorities are shifting from price to value. It’s a telling sign of the times that a retailer with the massive physical footprint of Walmart is opting to invest the time and effort into launching a subscription service. Walmart’s primary advantage has always been pricing, but in the ecommerce realm, convenience and shipping are arguably just as important to consumers as product pricing. The big-box retailer is at risk of losing its competitive edge and bolstering its ecommerce options accordingly.
Google Buy Button
Google’s button follows in the footsteps of Facebook and Twitter, which have both added similar functionality to enable purchases without navigating to a third-party site. With expectations being heightened by on-demand services that deliver instant gratification, a few more clicks to buy something has become a barrier to the purchase process.
Three years ago, Amazon overtook Google as “first position” in the consumer’s consideration set whenever they want to buy something. For many shoppers, Amazon has become the go-to when searching items with intentions to purchase. It makes sense – instead of looking at the first few web results on a Google Search, Amazon allows shoppers to search, compare prices, and purchase all on one page.
Digital ads generate 90 percent of Google’s total revenue, so there is a strong need to continue enticing people to click on ads, but that will only come by building a better shopping search engine. While Google is first in search, it also wants to be first in capturing that intent to buy. That’s going to continue to be an uphill battle as Amazon continues to lead, disrupt and dominate online ordering.
The Changing Customer Value Proposition
Both these moves illustrate the unmistakable impact of ecommerce as a significant revenue channel. It points to the evolving patterns of consumer shopping habits, and that companies, even household names, must adjust accordingly in order to keep their business and loyalty.
It also underscores the trend among customers who put value first. Not the traditional definition of value of getting more for less, like Walmart’s low prices, but value found in fast, free shipping, convenience, and ease. In Google’s case, it needs to go beyond the value of accurate, relevant search results and facilitate a seamless interaction from search to purchase.
Walmart and Google are quickly busting out the big guns, but whether it will be enough remains to be seen. Competition is stronger than ever. For instance, Target recently dropped its minimum purchase amount for free shipping to $25. And more disrupters loom on the horizon, such as Jet.com, a new entrant poised to be the “Costco” online after its emergence from private beta.
Ultimately, playing catch-up to Amazon’s features won’t cut it long-term. The key to stay ahead of the curve is innovating to improve your customer experience and exceeding expectations. Still, as these services roll out, we will see if late really is better than never.
Jerry Jao is Co-founder and CEO of Retention Science