According to an article in The Wall Street Journal, Google is in discussions with major retailers and shippers regarding the creation of a service that would let customers shop for good online and receive their orders within 24 hours for a low fee.
The rumored Google proposal appears to be a direct salvo at Amazon Prime, which, among other things, offers customers free two-day shipping on all their orders for $79 a year. According to The Wall Street Journal, Prime helped drive a 42% increase in Amazon’s sales during the first nine months of the year.
Google doesn’t plan on becoming an online retailer, according to the article, but it wants to help consumers find goods they want to buy through Google’s search engine’s product-search feature and then provide quick shipping while the retailer provides the merchandise.
When shoppers place an order on participating retailer’s websites, according to the article, Google’s system would kick in to offer them the option of same-day, or next-day delivery.
So does Google have a chance in this arena heretofore dominated by Amazon?
Dave Fazekas, associate partner, consumer products and retail, for marketing Rosetta, says with more etailers providing free shipping or at the very least discounted shipping, “the next logical differentiator is reducing the time from purchase to delivery. This trend will continue as etailers look to differentiate themselves beyond just price.”
Google has a history of going into areas it knows it can be successful in, so Fazekas believes this is a well thought out plan.
“Even if it’s helping their retail partners by offering up stronger product searches, and that in turn leads to more revenue, this will be a success. If Google truly can pull off positively affecting the delivery time, then it will be a home run.”
It’s unclear how much Google would receive for providing the retailers with delivery service.
EquaShip CEO Ron Wiener says the fundamental issue for Google is that it used to get a much greater share of online product searches, but with the tremendous success of Amazon’s Prime program, people have been doing their first search on Amazon instead of Google and usually closing the sale after the first search.
Amazon Prime has been around for seven years, but Wiener says other major retailers, search engines, and online marketplaces are just starting to “wake up and smell the toast. They all seem to be gunning for Amazon Prime now, but they’re trying to catch up from six miles behind.”
Same-day shipping is going to be a big new trend, Wiener says. “Same-day in-store pickup is a no-brainer. Same-day delivery has seen a lot of failed attempts over the years. Critical mass may or may not yet be there, but it’ll get a lot closer with Google and other players generating new demand.”
From the merchants’ perspective, Google’s proposal is going to potentially have many benefits, tapping into the ever-growing mobile shopper audience, Wiener says.
“At the same time it will increase pressure to keep up inventory levels or lose sales to competitors who have the item in stock when the shopper is in their car driving around looking for a good deal “right now.”
Wiener believes Amazon will remain in the driver’s seat even if Google steps up to the plate.
“Bottom line is Amazon has been in the same-day delivery market in a big way a lot longer than any of these other retailers and shopping sites,” he says. “They’re still prototyping but they’ve got several iterations under their belts already. While everyone else is still figuring out how to make it work, Amazon will be perfecting its model and spreading it to more cities around the world.”
Figuring out same-day delivery is much harder than it looks, Wiener says. “A lot of software integration is required for things to go smoothly. Stores have to be redesigned to facilitate inventory picking and Will Call more elegantly. They’ll have to have much more accurate inventory tracking than many have today. Courier availability and reliability is always an issue. For the national chains, this will mean many courier relationships or working with consortiums yet to be formed.”
What’s more, IT will need to catch up with the demand because it isn’t really there yet today, Wiener says. “For smaller merchants this will become hugely difficult to manage as customers start calling asking if they can deliver an item in a few hours’ time. They will lose sales to bigger players who have the item in stock and can get it into the customer’s hands in a few hours’ time.”