Wal-Mart,
the world’s biggest retailer, and Google, the internet’s predominant search
engine, are teaming up in an attempt to challenge Amazon’s growing dominance in
online shopping.
The venture,
announced early Wednesday, marries Google’s hands-free voice activated Google
Home program to Wal-Mart’s vast network of US stores to allow customers to
order groceries and other items to be home delivered through Google Express.
The
initiative is a direct rebuttal to Alexa, Amazon’s popular artificial
intelligence program, and comes as the online retailer prepared to swallow
Whole Foods Market in a transaction that will exponentially expand Amazon’s
presence in brick-and-mortar stores and is expected to lead to home delivery of
food through Amazon’s subscription prime program.
On
Wednesday, Whole Foods shareholders voted to support the $13.7 billion takeover
by Amazon. The transaction also received the green light from the US Federal
Trade Commission, which announced it completed a probe of whether the deal
could harm competition and would not investigate further.
Scott
Kessler, a CFRA analyst who covers Google parent Alphabet, said the
announcement made sense for both companies, filling in a gap in Wal-Mart’s
technology profile with the addition of voice-ordering capacity and potentially
boosting Google’s standing in e-commerce.
“What seems
to be happening is a lot of the companies are coming together to offer an
alternative to Amazon and this is one example of that,” Kessler told AFP in an
interview.
Wal-Mart
Stores head of e-commerce Marc Lore said the initiative will permit customers
to voice order hundreds of thousands of items beginning in late September.
Wal-Mart plans to integrate its “easy reorder” service into the program, which
allows customers to repeat orders of household staples and other frequent
purchases with a few fast clicks.
“This will
enable us to deliver highly personalized shopping recommendations based on
customers’ previous purchases, including those made in Walmart stores and on
Walmart.com,” Lore said in a blog post.
Walmart
holds the biggest share of the US grocery market of any retailer, with a
network of nearly 4,700 stores that the company says are located within 10
miles (16 kilometers) of about 90 percent of the US population.
But it has
faced increasingly stiff competition from Amazon, which is a big leader in
e-commerce.
Wal-Mart
last week reported a 2.1 percent rise in second-quarter sales to $123.4
billion, but net income fell 23.2 percent to $2.9 billion, in part due to more
aggressive spending on e-commerce.
Google
eliminates subscription fee
For Google,
the addition of Wal-Mart gives its platform access to a retailer even more
massive than the stores now participating, which include Target and Costco
Wholesale, two other big box retailers.
“We’re
entering an exciting partnership with Walmart to bring you hundreds of
thousands of products at Walmart’s Every Day Low Prices — everything from
laundry detergent to Legos — that you can buy through voice with your Assistant
on Google Home or on the Google Express website or app,” said a blog post from
Google senior vice president Sridhar Ramaswamy.
“We’re
thrilled to partner with one of the most popular stores in America to help make
your shopping faster and easier.”
Ramaswamy
also announced Google was dropping its annual fee under Google Express ($95 per
year) and would provide free delivery to larger orders, at least $25 or $35
with most stores.
Colin
Sebastian, an analyst at Baird, said Google’s move should boost sales of Google
Home and reflects its belief that e-commerce through voice platforms is a
growth area.
“We expect
voice commerce to become a more important part of Google’s revenue model over
the long haul, in particular as more searches migrate to voice platforms, and
where transactions may ultimately stand in for advertising,” Sebastian said.
“For
Walmart, we believe the partnership with Google helps address risks associated
with the ramp (up) in voice commerce, in particular the increasing number of
searches and product orders flowing through Amazon’s Alexa voice ecosystem.”
Shares of
Google parent Alphabet rose 0.3 percent to $927.00 and Wal-Mart Stores slipped
0.1 percent to $79.96.
0 Comments