Cnet reports that Google wants to challenge Amazon’s dominance in the e-commerce market by expanding the resources of its Google Shopping Express service.
Shopping Express is a service that lets users buy products from local retailers, and delivers them to their doors the same day or next day. It was first announced in March 2013.
Recode was first to release a report detailing Google’s plans to beef up the Shopping Express service by investing as much as $500 million into it. However, Cnet says that number is “quite exaggerated”, according to sources close to Google.
What is clear though, is that Google intends to put “a lot of money” into Shopping Express. Here’s a quote from Tom Fallows, head of Google Shopping Express, which was published in the Recode article:
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.
Also according to Fallows, Google plans to create a subscription model for its shopping service that’s similar to Amazon Prime.
Google stepping up its e-commerce offerings is not only a way for Google to expand its Shopping Express service, but it’s also a way for Google to expand its search advertising business. A greater e-commerce presence would in turn put Google in a better position to sell specialized ads using its own product listings.
Google’s share of mobile search ad revenue dropped to 68.5 percent in 2013, from 82.8 percent the year before, according to eMarketer.
The reason for the drop in search ad revenue is because when mobile users want to find something they tend to go to specific apps instead of heading to a general search engine. Shoppers might go specifically to the Amazon app, for example, instead of searching for the item on Google.
While Amazon has been a detriment to physical retailers, Google wants to align itself as an ally. Rather than taking the Amazon route of operating its own warehouses , Google will pick up the items from local stores. Google has already partnered with retailers like Target, Toys “R” Us, Costco, and Walgreens.
Google contends that it is a platform and partnership business, and will not one day change its operations at the expense of its brick-and-mortar partners.