Google Wants To Be a Shipper
Google is reportedly negotiating with major US retailers and shippers such as Macy’s, Gap and Office Max to set up an online service that promises consumers same-day or next-day delivery, according to the Wall Street Journal quoting people familiar with what’s going on.
It’s concerned that e-commerce and product search traffic is going directly to Amazon. comScore estimates that in the last year Amazon has handled three-to-four times as many product-related searches on its site as Google, dragging Internet advertising along with it. Google may also be jealous of Amazon’s bring-‘em-in Prime Program, which offers quick delivery for an annual $79 fee.
Apparently Google doesn’t want to sell directly to consumers. Instead it wants to work with retail web sites and combine its existing product search, which directs shoppers to retail sites, with a new quick-shipping service that it intends to create and oversee, the Journal said.
The service would determine if a nearby physical store has the product in stock. Google could then offer the consumer delivery in a day or two for a “low” fee.
Google plans to test the idea in the San Francisco area. It may involve UPS and local couriers.
Amazon’s Prime Program is supposed to have helped push the company’s sales up 42% in the first nine months of the year.
Macy’s admits to being approached but says it hasn’t made up its mind.
Google reportedly wants to launch the service next year to tap into a US online retail business that Forrester Research has projected will grow 12% to $197 billion this year, with Amazon taking nearly $50 billion.
Same-day shipping is said to be both “ridiculously” expensive and complicated and Forrester figures Google would have to subsidize the cost of the shipping because buyers now expect the service to be free.
The move would also reportedly put Google in competition with eBay and Shoprunner, which runs a fast-shipping program like Amazon Prime for a consortium of big retailers including Toys ‘R’ Us.
Ironically Amazon is one of the largest buyers of Google’s AdWords-based search ads, worth hundreds of millions to Amazon. Amazon CEO Jeff Bezos was also an early investor in Google.
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