After watching Amazon corner the online retail market, Google is in talks with merchants to begin a delivery service that would allow users to order items online from local stores and receive them within a day. But does it make sense for Google to directly take on the online retail giant?
For years, Amazon has been the online retailer of choice for most buyers. And lately, it’s become even more popular. Amazon’s relatively new Prime membership program now allows shoppers two-day delivery on anything for a $79 annual fee, and so far it’s been very popular. According to The Wall Street Journal, Prime led a 42% increase in the company’s sales in the first nine months of the year.
The problem for Google is that when shoppers buy items online, many people search directly inside Amazon, bypassing Google completely. According to comScore, Amazon sees about three to four times the number of product-related searches that Google does. Now, Google wants in on the action.
According to the WSJ, Google is in talks with Gap, OfficeMax and Macy’s to begin a delivery system in which users could search and order items, for a fee, that would get delivered within a day or two. The search engine wouldn’t be selling items directly to consumers, but it would act as a middle man between a shopper and a local seller. According to the report, Google is hoping to launch the program next year.
The move follows a number of other retail-related ventures for the search engine, including Google Wallet, which allows users to make payments with a mobile phone, and Google Offers, which is its daily deals branch. It’s unclear whether Google would take a cut of the sales, but it would certainly allow Google to grab advertising revenue elsewhere as it drives more people to shop through its search engine.
According to The New York Times and media research firm BIA/Kelsey, local advertising is already a large part of Google’s business. Local search ad revenue is around $6 billion annually and is expected to grow.
But taking on Amazon is a tall order. It’s been around for close to two decades now and has firmly supplanted itself as the default retailer of choice online. But as Google continues to find new ways to offer services to its users and generate revenue, the two online giants will only keep bumping heads.