Amazon are facing another invader into their home shopping market share, with Google putting more funds into its Google Shopping Express service.
Google apparently smells blood in the water as they chase e-commerce powerhouse Amazon into the grocery market, with the Californian firm set to pour up to $500 million into its Google Shopping Express service, according to a Re/Code report.
Shopping Express, first announced in March last year and currently operating in Los Angeles, northern California and Manhattan, serves as a same-day or next-day fulfilment middleman service between customers and local branches of a number of major American retailers, including Target, Costco and Toys‘R’Us. Shopping Express would directly compete with Amazon’s subscription based Prime service, which bundles grocery and gift fulfilment services through Prime Fresh and Prime Gift with its extensive digital media catalogue.
“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,” Tom Fallows, head of Google Shopping Express, said to Re/Code.
Amazon’s offering costs up to US$299 in annual subscription fees, and offers same-day delivery of groceries and perishables. While Google has not officially decided on a price for GSE, Fallows commented that it would not be surprising if the cost were to be under US$100 per annum.
“We intend this to be an affordable service that as many people as possible can adopt,” he said. “We are trying to democratize the world of same-day delivery.”
As part of the arrangement, GSE would retain control of the online shopping experience and resulting consumer data, forcing many retailers to baulk at Google’s initial offering. As the current business model stands, retailers will only receive aggregated consumer data from Google, gaining details about individual sales only through their own membership models or loyalty cards.
The retailers that have signed up with GSE are doing so cautiously, with only a handful of stores integrating with the system. General sentiments toward Google amongst these retailers range from eager to shore up their own technological knowledge, to a mild concern for being taken advantage of by the tech giant. There are also concerns that Google will leverage its control over consumer data to negotiate better marketing deals with suppliers, again at the expense of its partners.
“Very firmly no,” Fallows said of the prospect of establishing its own marketplace and effectively cutting its physical retail partners out of the picture. “Google is a platform and partnership business. We can’t say that strongly enough.”
With Google Shopping Express joining eBay Now, Instacart and other delivery-oriented shopping services in direct competition with Prime, Amazon will find their slice of this particular market growing smaller and smaller.