Google and Walmart’s Big Bet Against Amazon Might Pay Off

IT’S HARD TO overstate Amazon’s online retail dominance. With 76 percent market share of online retail, it’s as if the 1995–96 Chicago Bulls entered your local rec league. No one can challenge Amazon today, but a newly announced partnership between Google and Walmart—allowing you to order groceries from the latter with Google Assistant, or online via Google Express, starting in late September—may ultimately present a threat. Still, it’s a long-term long shot.

In Walmart, Google adds a retail behemoth to its Google Express service, an online shopping bazaar in need of an anchor. In Google, Walmart gains a foothold in the voice-enabled future of commerce. Whether the alliance ultimately pays off is almost beside the point; the alternative was watching Amazon pull further and further ahead.

Raise Your Voice

Here’s a vision for the future that Walmart and Google are banking on: You realize it’s time for a grocery run. Rather than hop in the car and head to the store, or tap through items on your smartphone, you simply say, “OK Google, order my groceries.” And that’s it. Your preloaded list of frequently ordered items shows up later that day or the next, depending on where you live, or will await you curbside at a nearby Walmart.
You can already pull off a version of this, as any Amazon Echo ad will tell you. In reality, though, it remains an untapped avenue for purchases.
“Everybody’s trying to get into virtual assistants, what we call conversational commerce. They’re banking on the fact that people are trying to do this even though they really don’t presently,” says Krista Garcia, a retail analyst with eMarketer, which tracks the ecommerce space.
Voice-enabled purchases may amount to as little as $250 million per year, says Jason Goldberg, SVP of digital marketing company SapientRazorfish. That’s a tiny sliver of the $390 billion ecommerce market last year, according to eMarketer. Walmart’s total revenue in its most recent fiscal year was $485.9 billion.

The biggest reason: It’s a shoddy experience. “The majority of products people buy are inconvenient to buy via voice,” SapientRazorfish’s Goldberg says. “There’s variance in sizes, configurations, payment operations.” Amazon Echo or Google Home can offer up its best guess if you ask for paper towels. But if it guesses wrong, you’re left with a game of 20 questions: How many rolls? Which brand? Single sheet or select-a-size? Repeat that for every item, and you see why most people would rather pull out their phones, or track down their laptop, or bang their head against the nearest countertop.
You have to get it right the first time. Otherwise, there’s little point to using voice at all.
Amazon has a decent shot at this, given how deeply it understands your purchase history. Google? Not so much, at least not before the Walmart deal. Google Express already partners with some big names—including Costco and Walgreens—but has such a negligible market share that it can’t reliably know what you want, when you want it.
Walmart helps on two fronts. First, it offers an “Easy Reorder” feature that lets customers pick up their go-to groceries with one click—or in this case, one breath. The partnership also offers an even more important benefit to Google: data. If a Walmart customer links an account with Google Express, Google will gain access to their purchase history—primarily online orders, but in some cases in-store shopping as well. And that means fewer questions about just what kind of paper towel to order.

‘White Space’

In their battle with Amazon, Google and Walmart are trying to exploit their toeholds in two unsettled arenas: digital assistants, and groceries.
Amazon has a big early lead in digital assistants. EMarketer’s Garcia pegs Alexa’s market share at 75 percent, with Google Home taking the bulk of what’s left. But it’s still very early days. And remember that Google Assistant lives not just in Google Home but in millions of Android smartphones as well. Which means that, unlike Alexa, it can pull in information from every part of your day, potentially powering a more attractive shopping experience.

“We’d love to find a way for you to build your shopping needs, and we can not only remind of you what you might need, and what you might want to add to that list, but also remind you that it’s Thursday, you’ve got 25 items on your list, that’s more than enough to be over the free pickup threshold. You’re five minutes off of a Walmart on your drive home. How about we have it ready for you by six o’clock,” a Google spokesperson says.
And while Amazon may have an indomitable hold over your TV and Crocs purchases, it has few inroads into the perishable goods Walmart built an empire out of. That’s why Amazon wants to buy Whole Foods, a deal that moved closer to completion Wednesday when the Federal Trade Commission effectively approved it.

“Grocery is a white space digitally for everyone in North America,” Goldberg says. “Nobody has traction yet.” Even with Whole Foods, Goldberg says, Amazon’s share of US grocery sales will still be about 2 percent.
When you narrow the aperture, Walmart and Google look less like hopeless underdogs. They’re unlikely to sell as much total stuff online as Amazon, either monetarily or in sheer number of items—Amazon stocks more than 400 million unique items on its digital shelves, while Walmart sits at around 57 million. But by teaming up, Walmart can at least work to ensure that it keeps its existing customers as they move their purchases online. And Google can fold up its white flag in online shopping for at least a little longer.
Google and Walmart have nothing to lose by throwing in together. The bigger questions are how much they stand to gain. Will smart assistants take over the world? Will shopping with your voice ever feel as natural as calling up a playlist? Will Alexa surrender enough of its lead to give Google Assistant a chance?
Taken individually, any of those could be a long shot. Together, they’re a Hail Mary. But the only other option would have been not to to try, which is no option at all.
And hey, even the Bulls lost a few.

Courtesy: wired.com