Google’s announcement that they are launching same day shipping is interesting and strategic given the emergence of Amazon as a likely reason for why impressions may be on the decline for some retailers in Google paid search. This was pronounced in this past 4th Quarter, and it’s most likely due to searchers moving to Amazon and, to a lesser extent, mobile apps to initiate their shopping.
Amazon has been building the infrastructure to offer same day shipping with the goal of eventually making this the norm as a shipping option. It is likely that same day shipping won’t be widely in place for the upcoming Holiday, but it will in use in use, for sure, with expansion imminent.
The big unknown is how important same day shipping will be to consumers. Based on Google’s action to build out this capability and Amazon’s investment to support it, both companies assume it will be. From the B2B side, Amazon provides this capability for their retail partners who don’t have the infrastructure to build it themselves. This has become a nice advantage to participate with Amazon. With Google’s announcement, this opens the door to same day shipping for retailers who are already Google advertisers (ie: basically everyone) so businesses no longer have to be an Amazon partner in order to provide it to their customers.
While Google’s announcement would appear to level the playing field and stem the tide of people going straight to Amazon for their ecommerce purchases in order to get same day shipping, I am not sure it does. There is another leg to the stool which may play a really important factor, and that is Amazon Prime. Where Amazon Prime comes in is that once same day shipping is more fully rolled out, consumers can potentially order and receive same day purchases at no shipping cost. And what same day shipping facilitates is the ability and convenience to order everyday items that consumers wouldn’t normally purchase online like drugstore items, stationary supplies, etc. The effect of this will be further growth in ecommerce and into categories that haven’t made sense up until now from the consumer’s perspective. Lastly, Amazon continues to evolve their value add for gaining new subscribers to Amazon Prime. An example of this is their bundling in access to their library of video content. For these reasons, from the consumer’s perspective, Amazon may still have the edge over Google even with Google’s ability to support same day shipping. From the B2B perspective, if Google were to build same day shipping into the Quality Score algorithm, they may get really fast adoption from their advertisers.
While Amazon represents a threat in terms of its ability to siphon off searches from Google, with continued evolution on Google’s part, it can effectively minimize future erosion – definitely from the B2B side but possibly from the consumer side, too. Its push into image ads with PLAs has been effective with some advertisers now seeing as much as 25% of their paid search revenue coming from this ad unit indicating a preference on the part of the consumer to click on them. The consumer has been trained to use Google for 10+ years, so if Google continues to evolve by providing a great shopping experience presenting the type of ad units consumers like and lots of value add like Amazon offers, they will continue to dominate. To this end, same day shipping is a great move in this direction.