Google introduced the Shopping Express service to compete with Amazon
Google Shopping Express service is Google’s (GOOGL) same-day shopping service. Google started this service in San Francisco last year. Since then it has also launched in northern California. Google introduced six months of free unlimited delivery as part of a promotional package. This service directly competes with Amazon (AMZN) Prime service, but the Prime service comes with an annual price tag of $99. However, Google and Amazon work differently here. Google works directly with local retailers, while Amazon maintains its own warehouse and has a much larger selection of items to purchase from.
e-Commerce market is poised for a stronger growth
The eCommerce market has shown strong growth in the past few years. According to the latest report from eMarketer and as the previous chart shows, the B2C eCommerce worldwide sales could grow from $1.23 trillion in 2013 to $1.47 trillion in 2014 at a growth rate of ~20%. The report also mentions that this market will grow to ~$2.36 trillion by 2018. It’s no wonder that online retailers like eBay (EBAY) and Amazon are investing heavily in order to leverage this growing market. It isn’t just pure online retailers, but also traditional brick-and-mortar retail players like Walmart (WMT) and Best Buy (BBY). These stores have also increased their presence online.
Google is excited about the response that its Shopping Express service has received
During the conference call to announce 2Q14 earnings, Google’s management was delighted with the response of this service. The management mentioned, “I can’t seem to find people who aren’t happy with Google Shopping Express. And we’re seeing tremendous results. We’re learning a lot. We’re getting a logistics right. We’re getting our processes right and you believe its clearly an opportunity for us and our teams are really, really excited about continuing to invest in that area. We’ll keep experimenting with different formats and different solutions to make sure that we can provide the most optimized experience to our users.”