Google’s Foray Into Home Delivery Is a Sideshow in the Real War With Amazon

Google has done little in the past few months to disguise its ambition to battle Amazon in shopping. But the search leader’s latest reported plans to get out in the street and start delivering products directly is a sideshow to the real contest between the two companies.
Or to put it another way: Google doesn’t really need to be on the ground to win.
The Amazon-Google retail rivalry has been playing out online for years. The premise is simple: if you’re shopping online, you’re most likely to start one of two places. You go to Google for information on the product and where to buy. Or you go to Amazon for information on the product, and buy it while you’re there. In that retail equation, the more steps of the shopping process Google can snatch from Amazon, the better for Google and its advertisers, many of whom are merchants also competing with Amazon. (Though it must be said Amazon advertises heavily on Google too.)
Given all the ways Google already competes with Amazon in shopping, moving into direct selling and shipping would seem to be the logical last step — a step the company appears to be taking.
Google is planning to take on Amazon Prime by offering a same-day delivery service from local stores, TechCrunch reports. If that plan actually moves forward, it will no doubt rely on the groundwork Google started laying months ago.

First, Google started requiring merchants to pay for product listings in search results, a step toward turning its search engine into a straight-up storefront. In December, it purchased BufferBox, a startup that makes storage lockers to take delivery of stuff you order online. Last month, Google bought Channel Intelligence, an e-commerce software maker and service provider that’s been around since the first dotcom bubble.
Among the the services of Channel Intelligence is an offering called “where-to-buy,” which allows stores to let online shoppers know if they have a particular product in stock. This would come in handy for a shopping service that relies on local stores for inventory — Google would have to know what the stores have in stock before they promise delivery. A competing platform already powers eBay’s store-to-door same-day delivery service, eBay Now, which is already up and running in San Francisco, New York and Silicon Valley.
Google’s main advantage over eBay would seem to be visibility. Google gets more online traffic, which means more chances to funnel online shoppers into its own shopping services. Other than that, Google’s same-day delivery plans seem to hinge on the same concept embraced by eBay, as well as startups like Postmates, namely that brick-and-mortar stores — a city’s retail infrastructure — can stand in for the massive warehouses that anchor traditional e-commerce operations like Amazon. Instead of incurring all the costs of buying and storing inventory, the thinking goes, why not just depend on the local retailers that already have the inventory? Couriers to ferry purchases between the stores and shoppers complete the picture.
The only problem is the math. While the city-as-warehouse idea is intriguing, it hasn’t been proven. I’ve used eBay Now, and it’s fun and cool. You can watch the courier’s route in real time on the eBay Now app, and in my case I ended up with a new pair of jeans in just a little over an hour. But no one knows how far the concept could scale. Brick-and-mortar stores as they’re designed right now are still mainly for walk-in shoppers, not e-commerce fulfillment. Logistics experts say there’s no way a store can match a traditional warehouse in terms of order-fulfillment efficiency.
And it’s these warehouses that Amazon continues to build, million-square-foot engines of efficiency rising closer and closer to the same big cities where Google’s same-day service would likely roll out. Amazon has already perfected the science of getting people anything they want in a day or two.
Except for its self-driving cars and its Street View teams, Google doesn’t have a ground game. At the same time, trying to build out a physical infrastructure to compete with the billions Amazon has already invested hardly makes fiscal sense, unless Google wants to make retail its main business.
Not that you could entirely blame them. Jeff Bezos (#19) just topped Google’s founders (#20 and #21) on Forbes’ new list of the world’s billionaires, while four Wal-Mart heirs beat them both in the top twenty. The fortunes of at least two other billionaires above Bezos, Larry Page and Sergey Brin are also rooted in retail. Shopping is a huge business. It’s understandable that Google would want to be a part of it.
But however much attention a Google delivery truck might get on the streets, the real contest will still play out online, where Google and Amazon are on much more equal footing. We live in an attention economy, and Google has the attention. It also has plenty of big clients who would like nothing better than to see Amazon starved of attention. Working together, they’ll try to steer clicks away from Amazon’s shopping carts and into their own baskets — a much more efficient way to beat Amazon than boots on the ground.