Google Product Search to Compete With Amazon Prime

(NASDAQ:GOOG) is reportedly working on an alternative to Amazon’s (NASDAQ:AMZN)
Prime two-day, shipping service that would let people shop for goods online and
get their orders shipped to their doors within a day for a fee, according to The Wall Street Journal.

Amazon Prime
is a popular program that lets consumers pay $79 a year for unlimited, free
two-day shipping. The service added thousands of free Amazon Instant Video
titles earlier this year.

Google is
working on an extension to its Product Search comparison service that would let
retailers such as Macy’s, Gap and OfficeMax include their goods for speedy
shipping. Product Search, which was recently refined to accelerate consumers’ search
, also lets users determine if local stores have a product
in stock.

The Journal
said that under the new service, expected to launch in 2012, consumers ordering
goods from participating retailer Websites would be offered the option for
same-day or next-day delivery. Google hopes to lure more users to Product
Search, which has come under regulatory scrutiny, with free or low-cost

Such a service
would certainly ratchet up the rivalry between Google and Amazon, both of which
declined to comment on the service.

Google has
been reaching deeper into Amazon’s cozy e-commerce market, offering an online
bookstore that competes with Amazon’s popular Kindle Store and courting major
brands for its Google Offers and Google Wallet mobile payment service.

Amazon has
leveraged Google’s Android platform to build the Kindle Fire tablet designed to
undercut existing Android slates in the market. The e-commerce giant
complements its tablet with its Android Appstore, an application market that
competes with Google’s own Android Market.

Such a service
would also be something of a gamble—as deep as Google’s pockets are from its
$30 billion a year advertising business, analysts believe. Forrester Research analyst
Sucharita Mulpuru told The Journal
Google’s move would be “ridiculously expensive,” because Google would
have to subsidize shipping costs.

Piper Jaffray
analyst Gene Munster, who has calculated that Amazon spends $90 for each of its
Amazon Prime customers who pay $79 a year, said a Google delivery service is unlikely
to have much of an impact on Amazon’s sales.

Munster said
in a Dec. 2 research note that while Google might be able to nail the
convenience factor of getting goods to consumers quickly, Amazon can offer all the
products in a single shopping cart. Google’s service would include shopping
carts for each retailer.


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