Google and Amazon expand same-day delivery. Will it work?
Google and Amazon are pushing the boundaries of online shopping with same-day delivery, and even if it fails, they still might end up winners.
Google and Amazon are bringing their same-day delivery war to Los Angeles.
Seeking the next big thing in online shopping, the two giants have been rolling out same-day delivery services in cities such as Seattle and San Francisco. Starting Monday, select neighborhoods in L.A. will have access to same-day delivery. Initially, Google Shopping Express is free (though Google may eventually charge $4.99), while Amazon Local Express charges $9.98, plus 99 cents for each additional item, hand-delivered to your door less than 24 hours after ordering.
On one hand, the trend to get-it-now might be more sizzle than steak, some analysts say. Just how many consumers really need to get that barbecue or bathing suit today instead of tomorrow – or even the next day after that?
But even if the sizzle fizzles, both Amazon and Google could end up winners – Amazon keeping itself top-of-mind for online shoppers and Google collecting a trove of useful data about consumers. Along the way, some analysts say, the same-day delivery war could hit local retailers in new ways as consumers increasingly see online vendors as able to meet even their most immediate shopping needs.
For now, however, some wonder if that's something Americans really want.
"Most people who like to go out and shop will still do so, while those who do most shopping online really won't find getting things the same day to be significantly better than waiting an extra day or two," says Thomas Way, a computer science professor at Villanova University in Philadelphia.
It isn't a matter of the companies overreaching, he says, "but a matter of solving a consumer problem that really doesn't exist."
To some degree, there are already businesses that offer what Google and Amazon are promising, at least in the grocery and delivery space. Postmates offers at-home delivery of local takeout food, for example. Instacart, FreshDirect, and Peapod are online grocers, and traditional brick-and-mortar brands such as Wal-Mart and Safeway offer same or next-day delivery of perishables and non-perishables.
Google will try to compete by teaming up with trusted grocers. Its problem, in some ways, is its brand, says Bridget Fahrland, vice president of client strategy at Fluid, Inc., an online marketing firm. When people think about Google they think search, e-mail, and maps – not retail and grocery. So, Google faces "a brand authority challenge, but their partnership with well-known national (and local) brands is a great way to overcome that hurdle," she says via e-mail.
Meanwhile, Amazon will have to persuade online shoppers that what began as a bookseller can now sell good mangoes and fresh haddock. "The biggest challenge for Amazon will be to establish trust and authority in the grocery space (same day delivery of hard goods will not be a hurdle for them)," says Ms. Fahrland.
On other items, Amazon will compete directly with local retailers by selling products from its site, while Google will act more of a liaison, with graduates of its "courier university" shuttling deliveries in Google-branded vehicles from retailers such as Target, Home Depot, and French specialty chain, L'Occitane.
The intrusion of such massive entities into the local retail space sends up a red flag for those concerned about the health of local businesses.
With same-day web delivery, there's almost no reason for busy working professionals to shop at local retailers, says Charles Tran, founder of CreditDonkey.com, a credit card comparison and financial education website. "Unless they just want the human interaction, and if there's a way for online sites to replicate that 'human touch' online, then that might be the last nail in the coffin for local mom-and-pop stores," he adds via e-mail.
Local businesses have been dealing with the online trend for years, and some are fighting back. In communities where aggressive "support local business" campaigns have been running, a 2014 survey shows a 7 percent increase in sales at local businesses, compared with a 2.3 percent increase in communities without any such strategies in place, says Jeff Milchen,co-director of the American Independent business Alliance.
He says he is cautiously optimistic about the prospects for small businesses to fend off serious damage from online same-day delivery.
That's important for local economies, says David Levine, CEO of the American Sustainable Business Council in New York. "Local businesses pay taxes that support investment in infrastructure, education, and other vital services,” he says, noting that most consumers are content to head for the quickest, cheapest purchase and do not consider the whole picture.
"These are the revenues that support job creation in the local economy and that help grow the middle class," he adds.
The more inroads online shopping makes into the consumer mind-set through an added convenience such as same-day delivery, for instance, the more removed that consumer could become from a local economy, says Mr. Levine.
In the end, these businesses may have other goals beyond revenue for their same-day delivery. Amazon may be seeking ways to make inroads into a customer’s daily shopping list, points out Fahrland. And even if Google loses money on local delivery, she says, it "could be potentially gathering a valuable convergence of customer data around retail, search, location, and social graph."