Google is known for tirelessly shaving milliseconds off delivering search results. Could the company use big data to do the same to deliver retail goods fast?
Sources speaking to the Wall Street Journal and New York Times say that Google, troubled by Amazon's dominance in product search with Prime's speedy shipping, is looking to partner with other brick-and-mortar retailers close to customers to offer the same one-two day delivery.
Potential partners include Macy's, The Gap, and OfficeMax, although a Macy's spokesman says they've made no decisions about participation, according to the Journal. If it comes to fruition, the service would launch sometime in 2012, starting with pilot programs in San Francisco and New York.
Instead of rebuilding Amazon's national storage and shipping infrastructure, Google appears to be pursuing a federated, software-service-side model. It would handle online search and payments on the customer side and use its data centers to match search requests with nearby stores, fulfillment centers and delivery services — particularly those who can provide fast, free shipping.
Why would Google want to play a bigger part in retail? The same reason it wants a part of identity services, offers and local search: customers seeking out products is increasingly playing a bigger and part of Google's core business in search and advertising.
Although Google's long offered what it calls "Product Search," customers have grown accustomed to turning to bypassing its portals and searching directly with retail specialists like Amazon or eBay.
Google wants those search hits, and the premium advertising space it can offer to customers already looking to buy something.
Continue reading 'Google Prime: Retail Competiton With Amazon Is All About Data' ...
"Google getting in the [physical] fulfillment is DOA," Forrester Analyst Sucharita Mulpuru said, noting the huge expense of trying to compete with Amazon in this space from scratch. "They want to play in local and help drive more online sales, which would drive more search revenue."
Besides helping drive search, inserting itself into the retail chain offers a company with Google's algorithmic firepower plenty of other revenue opportunities, by aggregating, analyzing and optimizing data on customer-retailer interaction.
"I expect the company will focus on becoming an arbiter of shopping intent and transactions," Mercent Corporation CEO Eric Best told Internet Retailer. (Best is in a position to know: Mercent provides marketing expertise to smaller retailers through Google, Amazon, eBay and other portals.)
Capturing data exhaust in online retail doesn't just play to Google's strengths; it could give the company a tool that Amazon may have difficulty matching.
Still, it won't be easy. Google's already run afoul of the Federal Trade Commission due to antitrust concerns. If Google actively engages in a substantial business relationship with retailers, it could easily be accused of tipping the scales to steer search traffic their way.
To a certain extent, that would be the whole point of partnering with Google. But retailers who don't participate in the program would have good reason to cry foul.
Another hurdle is plausibly delivering on two-day delivery — especially when Amazon and other companies have trained customers to expect (and seek out) free shipping.
Mulpuru is skeptical. "So much of local or same day fulfillment has nothing to do with figuring out the last mile," she said. Mulpuru also noted that while Google has a log history of encouraging independent teams to explore new projects, recently CEO and co-founder Larry Page has been ruthless in streamlining Google's offerings and focusing its teams on the company's core businesses.
Even if Google may be dipping its toes in the water, "Page may kill it before it sees the light of day," Mulpuru said.
If that's the case, both small e-retailers and Amazon-sized giants can breathe a lot easier.
