Google Testing Same-Day Delivery Service in San Francisco: Report
One problem Alvarez sees, however, is that Google may not be able to offer enough to get dedicated Amazon Prime customers to switch to another service after several years of being satisfied with their Prime experiences. If Google only cuts the price of such a service by only $10 a year, Alvarez doesn't see it attracting many Amazon customers. "Amazon has this market today," he said. "If Google wants to do this successfully, it's going to take more than this. A $10 price break isn't enough. If I've been using Amazon Prime for a while, why am I switching? What's the candy Google will offer to make me switch over?" Google certainly has been experimenting with e-commerce for a long time, with its Google Payments, Google Wallet and Google Checkout products. And in February, Google bolstered its online sales capabilities by acquiring a company, Channel Intelligence, that lets consumers buy products directly through product pages on Websites. One of the company's products, its Buy Now app, allows online retailers to show potential buyers a dynamically updated list of online retailers that have the advertised product in stock, where the consumer can purchase the item instantly with a click. "It's a question of can they really make money here?" Alvarez asked about Google. "With Amazon, they live and die as a retailer so they have to so they make it work for them."The big difference in the approach is that many brick-and-mortar retailers are left to try to compete with Amazon, which has been hurting those real-world stores, while the Google model would allow those stores to gain new online customers with Google's help, said King. "Amazon has come into retail markets, and their appearance has been challenging with traditional big-box retailers," he said. "By partnering with them, Google could be providing more of a hand up to them, which would be a benefit to the stores themselves." And for Google, a same-day delivery service in partnership with retailers wouldn't require them to build costly warehouses or have major supply chain needs, said King. "It's a less aggressive approach, but it also requires far less in the way of risk or investment for Google as well. They'd simply be acting as an intermediary, like using a Visa card." In October 2009, Amazon launched same-day delivery services in seven major U.S. cities as it expanded its buying options for its customers. This is not the first time that Google has dabbled with the idea of same-day delivery. The idea has at least been in discussions since late 2011, when the company began its Google Product Search service.
Charles King, principal analyst with Pund-IT, said the report about Google's same-day delivery aspirations is "actually a pretty interesting model in that Google is pursuing more of a partner model than Amazon" provides.