Although Google is recognized as the giant amongst search engines, much to the delight of advertisers, it is not the “go to” shopping destination for many consumers. That title may be claimed by Amazon which has built an empire on the sales of books which led to a portfolio of just about anything one may want to buy. This means Google is missing out on an opportunity to help advertisers close the deal on the ads they are serving up with search results and it means advertisers may want to focus more resources on Amazon’s platform. To combat this, Google is reportedly amassing a war chest to expand their Google Shopping Express service beyond the limited markets where it is available.
According to a new report, Google has reserved as much as $500 million to be able to expand the service. Unlike Amazon, which relies heavily on warehouses full of stock and third-party delivery services, Google is working on developing their own fleet of vehicles to make deliveries. Goods would be obtained from local retailers with which Google has developed a relationship. According to Google’s head of the Google Shopping Express service, Tom Fallows, “you can very much expect that we are putting a lot of money into this and we’re excited and willing to sustain that investment over time as this gets going.”
Fallows points out that one of the problems Google has, even with the shopping searches now available, is a breakdown in the ability to deliver a good to someone. This is most acutely true where Google has provided information on goods that are available “nearby” yet no easy way to complete a purchase.
The current Google Shopping Express service charges a $4.99 fee to consumers for each store that needs to be visited, although Google has been waiving that fee during their launch phase. Fallows says Google eventually wants to go to a membership fee model similar to Amazon’s Prime offering. The price point would probably be similar and is part of Google’s attempt to “democratize the world of same-day delivery.” Google would also get a cut of each transaction, reportedly a single-digit percentage, so any steps that can help them shift business away from Amazon and over to Google will help the bottom-line.
Although Google may be able to build out a system that could rival Amazon’s and give buyers a choice, there are some concerns out there with what Google appears to be planning. Some retailers are concerned Google could move to cut out the “middle man” which in this model is the merchant. Others are concerned Google may use the system to collect buyer data. That information could then be leveraged to pressure companies to invest in Google’s system in order to get preferred treatment in shopping search results.
Do you think the Google Shopping Express service will be able to threaten Amazon and grab a significant market share?
source: re/code
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