Amazon has a direct competitor, after all — the $365-billion pound gorilla named Google. En route to becoming the first trillion-dollar company by 2020, as one analyst predicts, it intends to continue to invest heavily in its redubbed Google Express same-day-delivery service, which yesterday expanded to the Chicago, Boston and Washington, D.C., metro areas.
That adds seven-million potential customers to the service, which has been serving a market of 12 million people in northern California as well as select neighborhoods in New York City and Los Angeles, albeit under the clunkier Google Shopping Express banner.
“In addition, 16 new merchants have been added to the roster, including Barnes & Noble, PetSmart, Vitamin Shoppe and Sports Authority,” ZDNet’s Charlie Osborne points out.
“Many people think our main competition is Bing or Yahoo,” Google chairman Eric Schmidt said in a speech delivered yesterday at Native Instruments, a digital music software and hardware company in Berlin, reports CNET’s Donna Tam.
“People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon,” Schmidt continued. “They are obviously more focused on the commerce side of the equation, but, at their roots, they are answering users’ questions and searches, just as we are.”
Google Express is “a business that at scale can be, we believe, very attractive,” Sameer Samat, Google’s vice president of shopping, tells the Wall Street Journal’s Alistair Barr and Rolfe Winkler. “We have to invest in and build the ecosystem to get to that point.”
Barr and Winkler report the undertaking “will be expensive,” however, with Evercore analyst Ken Sena estimating Google will need to “spend about $3 billion a year to reach the 100 largest U.S. metropolitan areas.”
One way to offset that, of course, is by charging consumers for the service, just as Amazon Prime does — even if it’s a digital loss leader of sorts.
“Starting today, Google will charge for those deliveries, which used to be free. Nonmembers can pay $5 per order, or join the service … for $95 a year, or $10 per month,” reports Engadget’s Richard Lawler.
“That membership covers free same-day or overnight delivery on orders over $15 (booze is an extra $3 per order for non-members, $0.01 extra, per store, for members), ‘first dibs’ on delivery windows, and can be shared across a household, but the good news is that there's a three-month free trial.”
Google has also “added a punch of color to our parachute,” it announced in a blog post by Brian Elliott, Google Shopping’s Head of Partnerships. The logo now sports two shades of blue, yellow and red.
“We’re going to help connect merchants with their existing customers,” says Elliott in a piece by the Boston Globe’s Dan Adams. “Our merchants have been seeing growth, and it saves time and effort for customers.”
Costco CFO Richard Galanti tells the WSJ’s Barr and Winkler that its customers “who shop both in stores and through Google Express are spending more, but they visit the stores less often, which may reduce impulse purchases.” But, he said, “we’ve seen relatively good results so far. We’re happy to expand with them.”
“Google will offer customer data to retailers, the Globe’s Adams reports. “Elliott said retailers will only see aggregated data — meaning individuals can’t be identified — unless customers explicitly give permission to share more information.”
So, has the same-day delivery battle come down to two digital behemoths slugging it out for dominance over the next few years? In reality, no one really knows what what will come along out of the ether by 2020 and what will flop in the execution.
At the end of Schmidt’s speech — titled “The New Gründergeist [Entrepreneurial Spirit]” and posted in its entirety on the Google Europe blog — he mentions that author Mark Twain was a good friend of the inventor Nikola Testa.
“One of my favorite pictures is of Twain in Tesla’s laboratory,” Schmidt says. “The great cynic and satirist is standing there, staring at a ball of light emanating from a coil in his hands. He is looking to the future. And he is amazed.”
Alas, poor Tesla. With over 300 patents to his name — including the main one for alternating current — the “archetypal ‘mad scientist’” as his Wikipedia entry describes him, was always looking to future. But he died broke and alone in a New York hotel room.