Business

Walmart forms partnership with Google to challenge Amazon

Google is forming a partnership with Walmart with the aim to challenge its biggest competitor, Amazon.

Beginning in late September, Walmart will offer its products on Google Express, Google’s e-commerce and delivery platform. Shoppers will soon also be able to order hundreds of thousands of Walmart goods just by speaking to Google Home, the company’s voice-enabled home assistant platform, and Google Assistant, the artificial intelligence tool available to Android users. This partnership marks the first time Walmart has made its products available online in the United States on another platform other than the company’s website. Google and Walmart hope to strengthen their respective businesses against Amazon, which poses a mutual threat.

Amazon’s overwhelming success in online shopping is negatively affecting the sales numbers of brick-and-mortar stores, such as Walmart. Customers are looking to buy products on Amazon more so than on Google. The results of a survey conducted last year reveal that an approximate 55 percent of U.S. citizens began their online shopping trips on Amazon, according to The Washington Post.

Some investors claim that challenging Amazon is a fool’s errand. They point out the company’s massive inventory, efficiency and delivery options compared to other retailers. Although voice-powered commerce is still in its early phase, so far Amazon’s Alexa-powered devices have dominated the space. On the Amazon Echo, Amazon is the only retailer available, which gives it a distinct advantage over competitors like Google Home. Google Home has multiple retailers on its platform, which means that Walmart will have to compete for exposure with major brand stores, such as Costco and Target.

Despite recently forming a partnership, Google cannot give Walmart preferential treatment on its voice-assistant platform, as that might alienate its other retailers. Both Walmart and Google have stated that their partnership is not focused on how online shopping works currently, but rather where it might go in the future. Since more than 20 percent of mobile searches are conducted by voice, Google claims that online shopping via the user’s voice is the next major innovation, according to The New York Times.

In the future, Walmart customers might link their accounts to Google, so that their Google Home can learn more from their past shopping behavior, and actually predict what they might want to buy in the future. For example, customers might want to reorder items they previously bought by speaking to Google Home, or, before purchasing an item, Google Home might suggest similar items that are on sale.

Since voice-enabled shopping is still in its infancy, some believe it holds strong growth potential. Walmart has not stood idle while Amazon surpasses its competition. Last year, the company received $486 billion in revenue compared to Amazon’s $136 billion, according to The Washington Post. As a result, Walmart has used that money to make a concentrated effort this year to expand its internet presence.

Following its acquisition of Jet for $3.3 billion last year, Walmart has become the second largest online retailer, according to The Washington Post. The stock market has rewarded Walmart for its attempts at broader internet outreach, as the Jet acquisition also led to a 10 percent increase in Walmart’s stock value, adding more than $20 billion in market capitalization, according to CNBC.

In recent months, Walmart has bought a string of other online companies, including Bonobos, ModCloth, MooseJaw and Shoebuy. Walmart’s website now offers more than 67 million products, increased by 30 percent since earlier this year, The Washington Post writes.

Since January, Walmart began to offer free two-day shipping on more than two million items, according to The New York Times. This is meant to compete with Amazon Prime, which provides the same service for an annual cost of $99.

As boxed retail falls out of favor for online shopping, and other retailers are at a loss at what to do with their empty stores, Walmart is partially repurposing its stores to fulfill internet purchases. Customers will soon be able to purchase products, such as groceries, and pick them up at Walmart locations. As an incentive, some items that are bought online and picked up will be discounted.

It seems the company’s efforts are paying off, as Walmart’s online sales increased 60 percent in the second quarter of this year, compared to a year earlier. According to The Washington Post, Marc Lore, who leads Walmart’s attempt to increase its internet business, said, “We are trying to help customers shop in ways that they may have never imagined.”

September 5, 2017

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