Is Google Shopping Express Destined to Become Webvan?

According to a post on re/code, Google is planning to spend $500 million to build out Shopping Express.The same-day delivery service is currently in limited availability but apparently the company is committed to expanding it nationwide.

Today Google Shopping Express is available in parts of California.

Google Shopping Express delivery areas

Current stores involved in the program include Target, Whole Foods, ToysRUs and a number of others (see graphic below).

Delivery is currently free for six months for “members” (credit card on file). Non-members pay $4.99 per delivery per store. Apparently eventually there will be an Amazon Prime-style fixed fee annual membership.

One version of the story is that Google is seeking to counter or compete with Amazon Fresh and grab a piece of the $500+ billion grocery market in the US. However Google’s ambitions are broader than groceries obviously.

If the company can connect Product Listing Ads, online payments and delivery it creates a “virtuous cycle” where merchants and consumers are both tied to the service (and merchants to PLAs, etc.) and it throws off an enormous amount of “closed loop” shopping data.

Such data would include “offline” buying habits and product preferences by zip (and by individual consumer), as well as purchase-conversion data for merchants. These data could inform lots of other things, including personalized search results, ads and promotions by Google across platforms.

The question is whether consumers will adopt home delivery (and associated fees) en masse. There are many bullish on this proposition. However I remain somewhat skeptical about the mainstream potential for this.

Google shopping express participating stores

Certainly services like Amazon Fresh or Shopping Express are useful on occasion and for specific needs but I don’t think that people will be replacing their real-world shopping with online shopping + local delivery.

Massive dot-com failure Webvan incorrectly assumed, as did Pets.com and Toys.com among others, that people would gladly and readily shift their offline shopping behavior online. Many would argue that Webvan was just ahead of its time and spent its cash unwisely. But I think it fundamentally misunderstood consumer behavior.

While online and offline commerce are blurring and more people buy things online, there’s a social-emotional component to offline shopping that can’t be fulfilled by shopping on the PC. People like to go out into stores, be with other people and see products physically. Shopping malls (horrific as they are) are entertainment environments — not just utilitarian collections of stores for consumer convenience.

I could be completely wrong but I’m betting that while services such as Shopping Express and Amazon Fresh can deliver utility and will gain some degree of adoption, they’re not going to be the multi-billion dollar businesses their companies hope.

Google has roughly $60 billion in cash on hand so if Shopping Express does become Webvan it’s obviously not going to cripple the company.

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2 Responses to “Is Google Shopping Express Destined to Become Webvan?”

  1. Pascal Levy-Garboua says at

    Hi Greg,

    I don’t doubt this can create billion dollar opportunities. The question you seem to ask is about how mainstream this can be – and this is a different question in my mind. An interesting model that is very popular in some European countries is the one of the grocery drive in: you order online, go to a drive-in like location where somebody puts your grocery bags in the trunk for free, and you just leave the lot.

    In the end, if online represents 20% (vs. 10% now) of total commerce 10 years from now, the value created by moving these additional 10% online will be very significant.

  2. Greg Sterling says at

    I think that there will be some adoption of these — grocery delivery in the US is very old. In NYC everyone delivers. However these e-commerce models always aggressively assume adoption and equally assume that people are happy to transfer their shopping habits from offline to online. What you describe is something like buy online and pick up in store. I agree that will become more prominent. In general “omnichannel” is happening and this will penetrate into grocery. I just don’t think these “online shopping-local delivery” models will span categories and have deep penetration. Perhaps in a generation. But not in the near term.

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    […] Google Shopping Express Destined to Become Webvan? (ScreenWerk) Greg Sterling: If the company can connect Product Listing Ads, online payments and delivery it […]

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    […] Is Google Shopping Express Destined to Become Webvan? (Screenwerk) – “While online and offline commerce are blurring and more people buy things online, there’s a social-emotional component to offline shopping that can’t be fulfilled by shopping on the PC. People like to go out into stores, be with other people and see products physically. Shopping malls (horrific as they are) are entertainment environments — not just utilitarian collections of stores for consumer convenience. I could be completely wrong but I’m betting that while services such as Shopping Express and Amazon Fresh can deliver utility and will gain some degree of adoption, they’re not going to be the multi-billion dollar businesses their companies hope.” […]

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