Google began fulfilling same-day/next day orders for retailers in Chicago, New York and Washington DC last week in a major expansion of its membership-based Google Express shopping service. The expansion, which comes after an 18-month pilot program in Northern California, gives merchants an option to Amazon and eBay, which are offering same-day/next-day services for merchants using different models.
Google had offered Google Express memberships for free under a pilot program it launched in San Francisco in March 2013. On Monday it announced it would begin charging $95 a year, or $10 a month to use the service after free trial periods. Customers can continue to use the service without joining by paying a $4.99 fee per transaction.
As of Oct. 13, Google Express offered same-day delivery in the Bay Area, Manhattan, West Los Angeles, Chicago, Boston and Washington DC and next-day delivery in Northern California on eligible orders of more than $15.
As part of the launch, Google Express announced Paragon Sports of New York City and Wrigleyville Sports of Chicago had joined the network as regional retailers and Sports Authority had joined as a national retailer.
Unlike Amazon, which is investing hundreds of millions of dollars to building its own distribution centers, Google Express is fulfilling from its retail partners stores and warehouses.
“Sometimes it will be a Google Express employee in-store, other times it will be one of the merchant’s own employees,” explained Google spokesperson Anaik Weid. “More and more were moving towards the latter.”
In Chicago, for instance, Google Express has placed its own employees at Wrigleyville Sports to pick, pack and ship all orders placed through the service, said Marketing Director Eric Castellucci. In exchange for sending Google Express a feed, Wrigleyville was able to open a new channel offering same-day fulfillment for customers willing to pay the membership fee.
“They are handling all the distribution,” said Castellucci. “They made it very easy for us.”
Amazon Prime sweetens the pot
The announcement puts Google Express in more direct competition with Amazon’s much more established Amazon Prime program, which charges members $99 a year for unlimited, free two-day shipping on more than 20 million items, plus free access to thousands of books, musical recordings, films and television shows.
Amazon Prime announced Monday it had sweetened the pot for its members by granting them 30-minutes early access to flash sales on Amazon.com and daily sales at MyHabit.com, its free, membership-only fashion sales site that offers up to 60 percent off designer brands.
This holiday, we are increasing the selection of daily sales events and Flash Finds, our best deals of the year, which feature unique brands and products that are rarely discounted, said Daren Hull, general manager for MyHabit.
Last week, Amazon.com was advertising upcoming “Lightening Deals” on Saucony trail runners, Skechers boots and soft-sided Coleman coolers featuring NFL team logos for 25 percent off. MyHabit was offering active wear from more than 20 brands, including Alo Sport, Columbia, Fila, Head, New Balance, Puma, Reebok, Umbro and Zuzuzen at 44 to 58 percent below full retail price.
Amazon now has more than 50 fulfillment centers in the U.S. and will have more than 15 sorting centers by the end of 2014. Last week, the company announced it will create 80,000 seasonal positions at those facilities. The new network of sorting centers is fueling a range of innovations like Sunday delivery in partnership with the U.S. Postal Service, later cut-off ordering times for customers and the ability to control packages deeper into the delivery process.
EBay’s click-and-collect model
EBay, meanwhile, continues to take a much less expensive and more piecemeal approach at its Marketplaces segment. Rather than spend hundreds of millions of dollars on fulfillment centers, eBay Marketplaces will partner with retail chains to replicate the “click and collect” model it has used in the United Kingdom, its President and CEO John Donahoe said during the company’s earnings call last week. In that model, a retailer agrees to let eBay customers pick-up their merchandise at their stores in exchange for additional store traffic. It’s been so successful in the United Kingdom, that the retailer Argos announced in July that it would expand the service from 150 to 650 of its stores.
“A consumer can avoid shipping expense and get the best of both worlds without eBay investing tons and tons of money,” explained Donahoe during eBay’s Oct. 15 earnings call.
In a presentation at Outdoor Industry Association’s annual executive conference in Asheville, NC Oct. 9, eBay executive Mark LaVelle urge retailer and brands to partner with companies like eBay rather than try to keep up with fast paced developments in e-commerce.
“My company is spending $2.5 billion annually on R&D,” said LaVelle, senior vice president and head of global product and strategy for eBay Enterprise, which helps Eastern Mountain Sports, Helly Hansen, Quiksilver, and Timberland as well as Dick’s Sporting Goods and SportChek run their online stores. “Can you outspend us? Can you outspend Amazon?”
Magento, an e-commerce company owned by eBay Enterprise, joined with one of its dealers, Zeon Solutions, as platinum sponsors of this year’s Rendezvous. A website developer and digital marketing specialist, Zeon lists a web site it developed for team dealer BSN Sports among the case studies on its site.
