Doubtful as this wouldn't really solve the problem.Amazon-like system - Amazon has > 50 FCs and projects like FBA that allow Amazon to economically be both closer the consumer with goods and consolidate shipment+handling costs to get the best economics they pass on to consumers.Local stores - The article hints that there maybe a local store angle here. e.g. I see my local macys has this in stock and they ship it to me. That seems far fetched as local stores typically have a) terrible inventory systems and b) little to no outbound shipping capabilities.Leverage 3PLs - This is most likely. Someone like a Fedex/UPS is known for their shipping capabilities, but they all also run what are called 3PL (Third Party Logistics) - that's a fancy name for a network of FCs.
Once you figure out the shipping piece, the real interesting debate is what the buyer-facing component looks like.
There are three ways the buyer part could work:
- Shoprunner approach - each merchant has to add the GPrime service to their site - very slow to get adoption and still not a great consumer experience.
- Marketplace approach - Products in the network are surfaced at a site outside of the retailers, the consumer checks out there. This allows the consumer to also have a multi-merchant cart and buy Gprime items from X merchants, etc. Other benefits that you get from a marketplace like eBay or Amazon apply such as:
- Integrated search/buy experience
- Integrated product reviews
- Integrated merchant reviews
- Integrated return policies and after the purchase mechanisms (very important if you want to really counter Prime).
My guess is that we are seeing the first clear signal that Google is going to become a true competitive marketplace to eBay and Amazon.
We've actually been forecasting this for years. Google has the hardest components of a marketplace already, they just haven't put them together:
- Buyers (check)
- Sellers (check)
- Catalog (Google Product Search)
- Payment system (check)
Really all they have to do is put a buy box on the product pages inside of Google Product search. Here's a mock-up of what that could look like:
You could even have a signal at the SERP (search engine results page) level or in organic that the merchant is part of Google Prime and their goods are available on the Google Marketplace.
On the back end, most merchants aren't setup to take orders from Google so there would be some work needed there, but the gap is relatively small.
Obviously this has some serious implications for everyone in E-commerce:
- Marketplaces - Amazon, eBay and Buy - Amazon could have a new viable competitor. eBay is odd-man out without a Prime system and could face the worst fall-out. Buy.com would have to decide which camp they are in, or come up with their own system.
- Large retailers - Would need to figure out is partnering with Google less or more evil than going it alone or partnering with Amazon - or should you partner with both?
- Small retailers - The big winners as they could level the playing field somewhat by having a Prime-like offering put together for them and funded by Google essentially.
- Shoprunner - are they toast or a viable alternative?
Stay tuned for more news as we hear it....
Would love to hear your thoughts in comments.
SeekingAlpha disclosure - I am long Amazon and Google, eBay is an investor in ChannelAdvisor where I am CEO.