Google Express Expands Reach, Undercuts Amazon Pricing
Google sees service as way to battle product search rival.
Google Shopping Express is now Google Express. In addition to changing its name, Google announced that it added new cities and new brands to its roster eligible for same-day delivery.
The service is now available in Northern California, Los Angeles (selected areas), San Jose, Washington DC, Boston, Chicago and Manhattan. New companies and brands added include:
1-800-Flowers, Barnes & Noble, Nine West, PetSmart, Vitamin Shoppe and Sports Authority, and regional merchants such as Paragon Sports in New York and Vicente Foods in Los Angeles. In our new markets, we’ve added regional brands including Stop & Shop in Boston; Giant Food in D.C.; and Lux Roses, TigerDirect, Treasure Island Foods and Wrigleyville Sports in Chicago.
Google Express now reaches geographic areas that include roughly 20 million people. The service has an Amazon Prime-like membership fee: $95 per year or $10 per month. Alternatively users can pay $4.99 per delivery. That pricing slightly undercuts Amazon’s Prime and same-day delivery pricing.
Google is offering three months free to encourage membership.
While eBay also offers same-day delivery that service will likely shut down eventually. The battle is really between Amazon and Google.
Google Executive Chairman Eric Schmidt gave a speech in Berlin yesterday in which he surprisingly said that Amazon is Google’s biggest search rival. Clearly Google sees same-day delivery as both a defensive and offensive strategy to compete with Amazon in product search.
There are major questions about whether such services can ultimately support themselves, let alone be profitable.
There are a range of secondary benefits that would accrue to Google around consumer data, product search and merchant ROI should the Express service ever get to scale. I’m quite skeptical however.
As a form of expedited shipping on a per-use basis we might see consumer adoption but it’s unlikely to take off as a Prime-like membership service for Google. As a candidate for same-day delivery in general the grocery segment is a separate use case.
More significant in my view will be retailers’ own real-time inventory buy online, pick-up in store initiatives that offer consumers convenience but still bring them into stores. An in-store retail shopper is much more valuable than a pure e-commerce shopper. To that end, startups such as Curbside will be on the radar for both Google and Amazon as a potential acquisition target.
The Wall Street Journal has a largely non-substantive interview on the Google Express changes and announcements with Sameer Samat, VP of Google Shopping.