Google is looking to create "a service that would let consumers shop for goods online and receive their orders within a day for a low fee," the Wall Street Journal reported. The move is a direct challenge to Amazon Prime - their membership program that offers fast shipping for no extra charge.
This new service covers a number of areas that could create problems for Google, but also gives them new areas to conquer.
This can also be seen as a move by Google to protect its core business - search. Amazon is increasingly becoming the destination for product searches. "Over the past year, Amazon has consistently handled between three to four times as many product-related searches on its site as Google does through its product-search service, according to research firm comScore Inc.," the Wall Street Journal noted.
Google has a history of aggressively protecting its position in the search space. When YouTube became the popular place to search for video Google bought them. When Yelp and other review sites became the way people searched for restaurants and other local services, Google launched Places.
Google's motivation for entering the mobile space with Android can also be seen tied to the explosive growth of searching now done with smartphones.
The shipping service may be a tough one for Google to pull off, and if it does it could also bring greater scrutiny from antitrust investigators.
Google has approached a number of shippers to suggest partnerships, according to the Wall Street Journal report, but no one was willing to confirm.
Macy's - one of the companies Google intends to use for the products that receive speedy delivery - confirmed they were in talks with Google but had not made a decision.
"The idea behind the new delivery service is that people searching for products online or on their phones could buy something from a local retailer or the local branches of nationwide chains, and could then take the next step – delivery – through Google," the New York Times reported.
The service, which Google intends to launch some time next year, is much more than just a delivery service.
If it becomes popular Google Wallet - which hasn't gained as much traction as the company would like - would see a huge boost in usage. Google Checkout, another less than successful venture, would also see major growth.
Google Offers would also see major growth, as the company could offer sales with rapid delivery which would be very popular and help them seriously impact Groupon and other daily deal services.
Another piece of this puzzle could be Google's recently rolled out Trusted Stores, which gives high- letter grades to retailers that have a history of fast shipping.
Many companies should look at what this new service could mean to their existing businesses. Mobile ad sales, local advertising, product search, comparative shopping, and even affiliate marketing will feel the impact.
Antitrust investigators will have to come back to the decisions Google has made to feature products in their search results pages. No doubt this service is not something they just started work on and the addition of products in the search results may have been testing the type of responses they could expect. Google would want to know if the investment was worthwhile, or at least generate a certain level of conversion while its popularity was given a chance to grow.
The dangers in this move are that it could change the way people perceive Google. Right now people see Google as a free service, somewhere to find information, but if the shipping product becomes popular that could change.
When the products arrive and customers aren't happy, Google would share some of their distrust. Does Google have the ability to do quality checks? Will products be subject to Quality Scores like they apply to their paid advertising offerings?
While small businesses would likely jump at the chance to add this service to help improve their sales, would Macy's and other national retail chains be willing to get involved? If Google includes their comparative search services would the big companies want to have this available?
For Google to succeed, "it would need to offer a universal shopping cart to retail partners that would function cross-site or allow users to buy directly from search results," The Street pointed out.
This could seriously impact brand - shoppers would concentrate on price and this could slowly dissolve the brand connect they have with the major retailers.
Given the potential to strengthen their position in local, mobile, and display advertising and push their Google Offers services even further, the move is understandable. Whether logistic problems will be too much is an issue that will have to be determined.
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