By Jack Nicas and Laura Stevens
Google and Wal-Mart Stores Inc. are joining forces in a
partnership that includes enabling voice-ordered purchases from the
retail giant on Google's virtual assistant, challenging rival
Amazon.com Inc.'s grip on the next wave of e-commerce.
Wal-Mart said Wednesday that next month it will join Google's
online-shopping marketplace, Google Express. While the deal will
add hundreds of thousands of Wal-Mart items to Google Express, it
will also give Wal-Mart access to voice ordering. The deal won't
alter how consumers receive their orders, because Wal-Mart will
fulfill purchases made through Google Express.
Consumers will be able to order Wal-Mart goods from the
retailer's stores by speaking to Google's virtual assistant, which
sits in phones, Google's voice-controlled speakers and soon other
devices. Wal-Mart said it will share consumers' purchase history
with Google to enable users to quickly reorder items, a primary
function of voice-controlled orders for commodity shopping.
"How do you help people who are going to be interacting more and
more with devices get their weekly shopping tasks taken care of?"
Google Express chief Brian Elliott said in an interview, citing a
key reason for the partnership.
The increasing importance of voice shopping suggests Wal-Mart
and Google, part of Alphabet Inc., need each other to compete
against Amazon. Voice-controlled ordering is a small but rapidly
growing share of online sales, analysts say, and one of the top
uses of Amazon's virtual assistant Alexa and its Echo speakers.
Google has "made significant investments in natural language
processing and artificial intelligence to deliver a powerful voice
shopping experience," Marc Lore, Wal-Mart's head of e-commerce.
Amazon effectively invented voice shopping, which allows users
to easily order goods, like toilet paper and diapers, thanks to
Amazon's vast data set on customers' past purchases. A significant
portion of online shopping is made up of consumers reordering the
same staples. That is well-adapted to voice ordering because a
device can recall the preferred brand, size and type, without
requiring shoppers to scan through different product listings.
"When I buy a product that I don't care about, it is actually a
pain for me to go to a website and find an item and check out,"
said Forrester analyst Brendan Witcher, a former retail executive.
"If I can simply say, send me dishwashing soap...and you send it,
that's much easier on me as a consumer."
To make voice shopping easier, Wal-Mart said it will allow users
to link their Wal-Mart accounts to Google Express, so a Wal-Mart
shopper who asks the Google Home for more toothpaste will get the
same brand she bought last time.
The Wal-Mart-Google partnership comes as Amazon continues to
expand its share of online purchases. In July, Amazon claimed
nearly 45 cents out of every dollar spent online, according to
receipt tracker Slice Intelligence, up from about 43 cents at the
start of the year. Wal-Mart, in comparison, claimed nearly 2 cents
of each dollar, holding steady.
Google launched Google Express in 2013 and steadily expanded the
service to reach the full contiguous U.S. by late last year. Google
enlists third-party firms to fulfill orders from a variety of
retailers, including Target Corp., Costco Wholesale Corp.,
Walgreens Boots Alliance Inc., and Whole Foods Market Inc., which
Amazon agreed to buy in June for $13.7 billion. Google Express
earns money on commissions from those merchants. Wal-Mart said it
would fulfill its Google Express orders itself, a new, likely
cheaper model for Google.
Google said on Wednesday that it is also dropping the $95 annual
fee for free shipping on orders that reach a given store's minimum
cart size, similar to a move Wal-Mart made in January. Google
Express' Mr. Elliott said the company decided to offer free
shipping on such orders, with a typical minimum of $25 or $35, to
make buying easier, particularly when ordering goods via voice
interactions.
Wal-Mart will leverage Google's virtual assistant and Echo
competitor, the Google Home, to make its goods available at the
sound of a consumer's voice. Google, meanwhile, hopes access to
Wal-Mart's inventory will help boost engagement and sales of its
assistant and speakers. The partnership will enhance the selection
and overall cachet of Google Express, which competes with delivery
services such as Instacart Inc., Deliv Inc. and Uber Technologies
Inc.
Amazon introduced the Echo in 2014, the voice-controlled smart
speaker that was the first of its kind, and sales quickly took off.
Google debuted its Home speaker late last year, and now has about
26% of the market as of June 30, according to Consumer Intelligence
Research Partners LLC. The Echo has the rest. Apple Inc. plans to
start selling its smart speaker in December.
More than half of Echo users have bought something on their
device, and about 30% of those customers buy something at least
once a week, according to Consumer Intelligence Research Partners'
survey of 300 device users. Google Home owners do so at a much
lower rate, the survey says.
In recent weeks, Jonathan Khoo, 40 years old, has ordered
frequently from his Echo, including Mr. Clean Magic Erasers,
Balance Bars, Krazy Glue and BIC lighters. Most of those are
inexpensive items that a shopper would usually need to bundle with
other purchases to reach a delivery threshold. But they ship as
single items via voice, a perk Mr. Khoo, a software developer, says
has convinced him to order more from his Echo.
The battle between Wal-Mart and Amazon has recently taken on new
intensity, most notably with Amazon's planned acquisition of Whole
Foods, which heightens their competition in groceries. Wal-Mart
this week said it is expanding grocery-delivery tests with Uber,
and is testing some deliveries by store workers. Google and
Wal-Mart hope to enable users to order fresh groceries via voice
for in-store pickup next year.
Wal-Mart is competing more aggressively online since its $3.3
billion purchase of shopping site Jet.com last year, headed by Mr.
Lore, who then took over Wal-Mart's e-commerce business. Mr. Lore
was formerly at Amazon after the online giant bought his e-commerce
site in 2010. Amazon recently shut down the unit, Quidsi, citing
its unprofitability.
Khadeeja Safdar contributed to this article.
Write to Jack Nicas at jack.nicas@wsj.com and Laura Stevens at
laura.stevens@wsj.com
(END) Dow Jones Newswires
August 23, 2017 00:15 ET (04:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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