Will Amazon be threatened by the Walmart/Google partnership?

L’alliance entre Walmart et Google fera-t-elle trembler Amazon

First Amazon and Whole Foods, now it’s the turn of Walmart and Google! Further proof that, as already discussed here, we are currently experiencing the third stage of a worldwide retail revolution.  The revolution is not only underway but also gathering pace! In this context, only those distributors willing to partner with their rivals will survive.

 

By joining up with Google, Walmart is beginning its assault on American household purchasing, an area in which it is waging all-out war with Amazon on online sales and cross-channel optimisation.

 

Why are things gathering pace? Because the leading pure players have realised that they are the ones who are going to reinvent brick and mortar commerce. Yet, their strength combined with the confidence of their shareholders means there is real danger afoot. And things are speeding up at all levels.

 

The amounts of investment brought to the party in the last few months have been frightening, with Amazon buying Whole Foods for 13.7 billion dollars and Alibaba purchasing Suning for 4 billion dollars and Intime Retail for 2.6 billion dollars… The pure players are evidently staring to step on the toes of brick and mortar networks to invent a “new retail”, to use the favourite phrase of Alibaba CEO Daniel Zhang. And then there’s Jack Ma, who last June announced to his 400 biggest shareholders that Alibaba would be the world’s fifth largest economy by 2036.

 

Those who are still dallying don’t have any time to waste! Giants like Walmart, which is still enjoying the highest turnover in the world (485 billion dollars) although not the highest Gross Merchandise Volume (marketplace total sales value) are well aware of the urgency of the situation and are speeding things up. Not everyone can be involved!

 

It’s safe to say that Carrefour, led by new CEO Alexandre Bompard, should be realising that the battle has reached new heights.

 

For 15 years, world number one Walmart has been investing and learning from its mistakes…and what if this paid off, allowing it to re-enter the race? 

 

You either love or hate Walmart and its Yankee feel…but everything the distributor has been doing for the last 15 years is commendable and the energy it has put into trying to compete with Amazon, admirable.

 

For 15 years, Walmart has been using a test and learn process with a team of 1500 people all fully committed to digital. Walmart will have tried “everything” (its penultimate initiative being to acquire Jet.com), before this latest announcement of the highly beneficial partnership with Google allowing Walmart to enjoy perks such as appearing on the Google Express app, among other things.

 

The company is sending out a clear message: “We are going to stop trying for trying’s sake and instead take action and partner with Amazon’s biggest competitor”. It’s well-known that Google now fears competition from Amazon as an assistant/“search engine”. The era of “test and learn…and fall” is perhaps finally over for the market leaders who want to make up some time and improve their position in this frantic race!

 

By partnering with Google, Walmart is back in the race against Amazon and Alibaba.

 

The initiative is part of an encouraging current dynamic for Walmart, whose online sales (just 3% of its turnover) are only improving. In June, Walmart announced a 60% rise in online sales during the second quarter of 2017, and a 67% rise in GMV (Gross Merchandise Volume) for marketplace sales, giving customers access to more than 67 million products online. But good news: Walmart’s efforts in online sales, including the purchase of Jet.com for 3 billion dollars, should soon start to pay off. Walmart Pick Up services are scheduled to arrive in its 4700 stores from 2018, which should give the company some extra weight.

 

Google Home/Walmart – Amazon/Alexa: with voice shopping, the retail battle will be entering American homes via the ambient web. This is the first time that Walmart has allowed an intermediary to sell its products. As well as benefitting from Google’s data technology and expertise with Google Shopping and Google Express, Walmart is looking to pick up repeat business from Americans right inside their homes70% of the brands we buy are the same from one month to the next. And this is possible with voice assistants being brought into homes. But let’s not forget that Google Home and Amazon Alexa technologies are also designed to be linked up to future connected objects in the home. Google is expecting 50% of orders to be made by voice by 2020. Today these already represent 20% of total orders.

 

Walmart has understood that the future is about AI, bots, chatbots and other search assistants connected to the Internet of Things. Search assistants? These are Google’s new flagship product, with the company itself starting to talk about the end of conventional search engines. For me, this is the key part to this partnership announcement, given that they are almost making official the future arrival of voice ordering via mobile as well as via the ambient web in homes and even beyond thanks to data sharing: Walmart customers will be able to use their account and loyalty programme on Google Express. The retail battle will now take place in the home!

 

Everything is therefore in place for the rollout of the new Pick Up service across Walmart’s 4700 stores and enhance a seamless buying process: bingo.

 

Pre- and post-shopping: a better investment distribution.  

 

Yes, Walmart has done a clever deal and it was necessary. By partnering with a “giant” like Google, it can finally throw a spanner in the works of GAFA and BATX retail hopes. For brick and mortar players, Amazon is doubly irritating: it provides fantastic services pre- and post-shopping.

 

Yet, the service to be set up for Walmart by Google from September should be free above a low minimum spend for delivery, which should annoy Amazon somewhat. The details of the Walmart/Google offering are still to be released, but if it provides free delivery within the hour, Amazon’s Prime Now service, which delivers within an hour but is part of the paid Prime subscription, will seem weaker.

 

All about pre-sales: preparing orders and making a shopping list.

 

We know that digital shopping lists are now a reality. Whenever you order click and collect, to a pick-up point or for delivery, your shopping list reflecting your current consumption patterns is saved.

 

4700 Walmart stores: an opportunity for Google Home which is struggling to keep up with Alexa… 

 

All partnerships involve win-win deals. The Walmart/Google agreement is no exception to the rule as it allows Google to benefit from the support of the 4700 Walmart stores visited by 20 million Americans every day and so be part of the Walmart customer world and create a new buying experience via voice ordering. In the race between Alexa and Google Home, the latter is lagging behind with 20% of market share compared to Alexa’s 70% (Source: eMarketer). Walmart has announced that it will be using its US stores to “create customer experiences that don’t currently exist including using voice shopping”. This is key for Google, which has not seen its Shopping offering truly bear fruit in the past few years.