The Battle Of Google vs. Amazon

Google is marching toward the disintermediation of retailers and brands, both online and brick and mortar, with Google Express. In the process, it may be threatening the future of Amazon. A battle is looming. How will it all play out?

Google is marching toward the disintermediation of retailers and brands, both online and brick and mortar, with Google Express. In the process, it may be threatening the future of Amazon. A battle is looming.

For $10 per month or $99 per year, Google offers consumers the opportunity to shop online and receive same day delivery in a growing number of select cities. Subscribers can shop by retailer or by item, accessing a wide variety of products across multiple stores. While this is not the only on-demand delivery service that has been introduced to the market, it has great competitive differentiation and advantage.

On-demand delivery is a new segment that aims to combine all three drivers of consumer purchasing behavior: economics, immediacy, and convenience.The economic buyer pursues the best deal. The immediacy buyer seeks immediate gratification and will sacrifice price to acquire the product as soon as possible, often searching for products online and then buying in store. They will also pay through the nose for expedited shipping. The convenience shopper is attracted to online shopping and on-demand delivery.

On-demand delivery services like Walmart has are brand-specific and attract Walmart customers. On demand combines a customer’s sense of urgency with convenience for a customer who is already economically sensitive. Google, on the other hand, is a multi-retailer and product mechanism that both attracts and converts customers. Google Express preys on the diminishing store brand loyalty as an aggregator of products. It leverages the participating store brands to attract the consumer while simultaneously promoting specific products without regard for the stores.

On-demand delivery threatens store brand loyalty in general, as consumers visit brick-and-mortar locations less frequently and purchase more products online. Impulse checkout line purchases also decline with the loss of store visits. A brand-based on-demand delivery service like Walmart’s aims to maintain brand loyalty, but Google Express disintermediates the association of product and store for the consumer.

Of great significance is that Google Express also encroaches on the domain dominated by Amazon: e-commerce. Amazon is a product-driven mechanism that leverages price over retail brand. Consumers shopping Amazon are not focused on the retail brand, only on the product and the deal. Amazon’s subscription-based Prime service guarantees free two-day shipping, instant video, music, and the Kindle Library for $99 per year. Prime has managed to attract the immediacy shopper while maintaining the economic draw of e-commerce.

Consumers shopping Google Express are also not required to shop by retailer. They can buy the same product from different retailers participating in the program, thereby weakening consumer loyalty to participating retailers over time. Competitive pricing will no doubt surface between participating stores that offer similar products. Price competition introduces the same economic drivers that has fueled Amazon’s meteoric growth. Therefore, Google Express is combining immediacy, convenience, and the consumer’s focus on price all together for the first time.

As the search mechanism of the Internet, Google has the opportunity to leverage virtually all consumer search for both stores and products to capture the sale itself. Amazon relies on consumers searching for products only. Furthermore, while Amazon’s primary source of revenue is direct visits, its second greatest source of Web-based traffic comes from Google search. As Google ramps up its role in the e-commerce realm, it has an obvious advantage and opportunity to direct consumer product search toward Google Express, thereby cutting off Amazon’s greatest external source of traffic and revenue.

What can Amazon do to combat these events? For one, Amazon is hoping that drones will help counter Google’s newfound delivery speed with its version of same-day delivery. That would further strengthen its dominant market position by meeting the rising demand for immediacy. While a slick idea in principle, drones have to clear a mountain of regulations before getting off the ground. Furthermore, it’s far easier to down a fleet of drones in bad weather than it is an army of delivery trucks. In truth, it might be wiser for Amazon to merge with a rapidly embedded infrastructure like Uber to promote fast distribution in line with Google Express.

Clearly meeting the needs of the economic, immediacy, and convenience shopper is the way commerce is progressing. Retail and e-commerce alike will have to figure out how to align all three of these consumer drivers into their offerings, if they want to remain competitive. And it is clear that Google’s control of the customer attraction engine, coupled with its rapidly expanding sales and delivery solutions, will threaten retail and e-commerce brands alike.

Time will tell how this fight unfolds, how two great combatants like Google and Amazon will position themselves on the battlefield. But there is no doubt that this battle will leave the bloody corpses of many companies that rely on each of them littering the field.