Wal-Mart and Google Team Up to Challenge Amazon
Wal-Mart and Google Team Up to Challenge Amazon
The retail giant will join Google Express, adding
hundreds of thousands of items to the online-shopping marketplace
By Jack Nicas and Laura Stevens Updated Aug. 23, 2017
2:09 a.m. ET
Google and Wal-Mart Stores Inc. are joining forces in a
partnership that includes enabling voice-ordered purchases from the retail
giant on Google’s virtual assistant, challenging rival Amazon.com Inc.’s grip
on the next wave of e-commerce.
Wal-Mart said Wednesday that next month it will join
Google’s online-shopping marketplace, Google Express. While the deal will add
hundreds of thousands of Wal-Mart items to Google Express, it will also give
Wal-Mart access to voice ordering. The deal won’t alter how consumers receive
their orders, because Wal-Mart will fulfill purchases made through Google
Express.
Consumers will be able to order Wal-Mart goods from the
retailer’s stores by speaking to Google’s virtual assistant, which sits in
phones, Google’s voice-controlled speakers and soon other devices. Wal-Mart
said it will share consumers’ purchase history with Google to enable users to
quickly reorder items, a primary function of voice-controlled orders for
commodity shopping.
“How do you help people who are going to be interacting
more and more with devices get their weekly shopping tasks taken care of?”
Google Express chief Brian Elliott said in an interview, citing a key reason
for the partnership.
The increasing importance of voice shopping suggests
Wal-Mart and Google, part of Alphabet Inc., need each other to compete against
Amazon. Voice-controlled ordering is a small but rapidly growing share of
online sales, analysts say, and one of the top reasons to use Amazon’s virtual
assistant Alexa and its Echo speakers.
Google has “made significant investments in natural
language processing and artificial intelligence to deliver a powerful voice
shopping experience,” Marc Lore, Wal-Mart’s head of e-commerce.
Amazon effectively invented voice shopping, which allows
users to easily order goods, like toilet paper and diapers, thanks to Amazon’s
vast data set on customers’ past purchases. A significant portion of online
shopping is made up of consumers reordering the same staples. That is
well-adapted to voice ordering because a device can recall the preferred brand,
size and type, without requiring shoppers to scan through different product
listings.
“When I buy a product that I don’t care about, it is
actually a pain for me to go to a website and find an item and check out,” said
Forrester analyst Brendan Witcher, a former retail executive. “If I can simply
say, send me dishwashing soap…and you send it, that’s much easier on me as a
consumer.”
To make voice shopping easier, Wal-Mart said it will
allow users to link their Wal-Mart accounts to Google Express, so a Wal-Mart
shopper who asks the Google Home for more toothpaste will get the same brand
she bought last time.
The Wal-Mart-Google partnership comes as Amazon continues
to expand its share of online purchases. In July, Amazon claimed nearly 45
cents out of every dollar spent online, according to receipt tracker Slice
Intelligence, up from about 43 cents at the start of the year. Wal-Mart, in
comparison, claimed nearly 2 cents of each dollar, holding steady.
Google launched Google Express in 2013 and steadily
expanded the service to reach the full contiguous U.S. by late last year.
Google enlists third-party firms to fulfill orders from a variety of retailers,
including Target Corp., Costco Wholesale Corp., Walgreens Boots Alliance Inc.,
and Whole Foods Market Inc., which Amazon agreed to buy in June for $13.7
billion. Google Express earns money on commissions from those merchants.
Wal-Mart said it would fulfill its Google Express orders itself, a new, likely
cheaper model for Google.
Google said on Wednesday that it is also dropping the $95
annual fee for free shipping on orders that reach a given store’s minimum cart
size, similar to a move Wal-Mart made in January. Google Express’ Mr. Elliott
said the company decided to offer free shipping on such orders, with a typical
minimum of $25 or $35, to make buying easier, particularly when ordering goods
via voice interactions.
Wal-Mart will leverage Google’s virtual assistant and
Echo competitor, the Google Home, to make its goods available at the sound of a
consumer’s voice. Google, meanwhile, hopes access to Wal-Mart’s inventory will
help boost engagement and sales of its assistant and speakers. The partnership
will enhance the selection and overall cachet of Google Express, which competes
with delivery services such as Instacart Inc. and Uber Technologies Inc.
Amazon introduced the Echo in 2014, a first-of-its-kind
voice-controlled smart speaker, and sales quickly took off. Google debuted its
Home speaker late last year, and now has about 26% of the market as of June 30,
according to Consumer Intelligence Research Partners LLC. The Echo has the
rest. Apple Inc. plans to start selling its smart speaker in December.
More than half of Echo users have bought something on
their device, and about 30% of those customers buy something at least once a
week, according to Consumer Intelligence Research Partners’ survey of 300
device users. Google Home owners do so at a much lower rate, the survey says.
In recent weeks, Jonathan Khoo, 40 years old, has ordered
frequently from his Echo, including Mr. Clean Magic Erasers, Balance Bars,
Krazy Glue and BIC lighters. Most of those are inexpensive items that a shopper
would usually need to bundle with other purchases to reach a delivery
threshold. But they ship as single items via voice, a perk Mr. Khoo, a software
developer, says has convinced him to order more from his Echo.
The battle between Wal-Mart and Amazon has recently taken
on new intensity, most notably with Amazon’s planned acquisition of Whole
Foods, which heightens their competition in groceries. Wal-Mart this week said
it is expanding grocery-delivery tests with Uber, and is testing some deliveries
by store workers. Google and Wal-Mart hope to enable users to order fresh
groceries via voice for in-store pickup next year.
Wal-Mart is competing more aggressively online since its
$3.3 billion purchase of shopping site Jet.com last year, headed by Mr. Lore,
who then took over Wal-Mart’s e-commerce business. Mr. Lore was formerly at
Amazon after the online giant bought his e-commerce site in 2010. Amazon
recently shut down the unit, Quidsi, citing its unprofitability.
— Khadeeja Safdar contributed to this article.
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