Update: This article about Google Express (then called Google Shopper Express) was first posted on August 11, 2014. On August 24, 2017, Google and Walmart announced they will be partnering in using the delivery service Google Express.

In the early days of internet browser-based e-commerce, entrepreneurs and VCs heard the siren call of applying the Domino’s Pizza delivery model (push-button ordering and instant delivery) to a wide range of consumer products. Unfortunately, it ended up being like the Animal’s song, “House of the Rising Sun”: it was “the ruin of many a poor boy.” Startups like Webvan (named by CNet, “the largest dot-com flop in history”) and Kozmo.com became the high profile poster children for dozens of similarly funded and failed concepts. (Ironically, Domino’s and other fast service eateries cracked the code early on.)

While such early attempts failed, the same day delivery, local e-commerce dream is still alive. This time around, however, the two most powerful names in online marketing are giving it a shot. And this time around, those two powerful names will soon find themselves competing with small businesses at the same time they are trying to cast themselves in the role of being among the best friends local, small businesses have.

Same day local delivery 2.0

Last week, the big box (or, “category killer”) bookstore chain Barnes & Noble became the latest national retailer to take part in Google’s nascient same-day delivery service called Google Shopper Express. According to retailing analysts, the move was a part of Google’s strategy to compete with Amazon.com’s same day delivery service, available now in 12 U.S. cities..

Launched last year and currently available only in San Francisco, Los Angeles and New York, Google says Shopping Express brings “local stores right to your doorstep” and enables customers to “enjoy same-day delivery on the items you need.”

But the stores Google describes as being “local” are all national chains. The retailers include Costco, Walgreens, Staples, Target and many others.

If Google’s strategy is to join these category killing chains in a battle against their common enemy, Amazon, there’s a good possibility that certain types of local retailers who compete with such big boxes will get caught in the crossfire.

The fog of coopetition

It is not unusual for online competitors to also cooperate. For example, many of the companies that provide products through Google Shopper Express also sell products through Amazon. (Here are nearly 800 Staples-branded products you can purchase through Amazon.com.) Even more fascinating to those who would take at face value the pundit’s claim that Google is out to compete with Amazon.com: The e-commerce giant is either the number 1 or 2 largest advertiser on Google, accounting for over $50 million in annual revenues to Google.

Does Google want to compete with the geese that lay its golden eggs?


Decision makers at Google are smart enough to rationalize* the notion that partnering with category-killer retailers to compete directly with local retailers doesn’t actually compete directly with a source of advertising revenue that dwarfs that generated from Amazon.com: The local, search advertising revenue from local small businesses that used to flow to the Yellow Pages but now flows to Google–at the torrential rate of as much as $20 billion (that’s with a “b”) annually.

Google obviously recognizes the importance of such local small businesses to their company’s overall strategy, as the company has aggressively launched outreach efforts to small and local businesses like Google My Business and “Get Your Business Online.”

Does partnering with national retail chains hurt Google’s claim that it helps small businesses?

Over the past several months, we’ve observed the emergence of a counter intuitive theory that Amazon’s success against the big box book retailer Barnes & Noble played an ironic but important role in the resurgence of local, independent bookstores. The theory reflects the ancient Arabic proverb that says, “The enemy of my enemy is my friend.” Heading toward extinction after a couple of decades of being steamrolled in market-after-market by Barnes & Noble, independent bookstores saw their major competitor crushed by Amazon (and poor management). After hitting a bottom, there has now been several years of growth in the number of independent bookstores.

Is Google feeding same-day delivery sales to the Barnes & Noble down the street going to undercut Amazon’s unanticipated aid to independent bookstores? It won’t hurt, that’s for sure.

The fog of synergy

In reality, the national chain retailers, Google, Amazon and small businesses are at that point in the evolution of e-commerce where no one knows precisely how this is all going to play out. Mobile commerce, for example, is seen as both a threat called “showrooming” (shopping in a physical store and ordering online) and a benefit called “webrooming” (research online and purchasing in store).

As with the “Amazon helps independent bookstore” theory, unintended consequences emerge over the long term. Who knows? Big boxes may crush some small businesses in their vertical, while greatly benefitting small businesses not in that vertical (office supplies, for example, have hurt small businesses in their vertical but have provided a benefit to small businesses in other categories; COSTCO and Sam’s Club both have small businesses as the key customer segment they serve, thus the “wholesale” term in the way’s they describe their businesses).

At this point, it makes sense for Google and national retailers to cooperate in exploring new delivery systems. Chances are, if it works, one day it may benefit small businesses as well. Who knows, maybe one day, the Amazon drones can swing by your store and pick up deliveries, as well.

However, it is important to also be aware that a company as big and encompassing as Google can’t claim neutrality when it launches products and services that can only win if a small business loses.

*Recently, Avery Pennarun, a Google engineer, used his personal blog to observe that super smart computer-types at Google can “convincingly rationalize nearly anything.” He explained that, “Working at a large, successful company lets you keep your isolation. If you choose, you can just ignore all the inconvenient facts about the world. You can make decisions based on whatever input you choose.”

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