Google steps up e-commerce war with Amazon, report says

The search giant plans to go after Amazon in an effort to beef up product search and e-commerce offerings. Google's first target: groceries.

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Google looks to bolster its e-commerce offerings. Screenshot by Richard Nieva/CNET

For millions of online shoppers, Amazon is the online mega retailer that brings them everything from electronics to cosmetics, and in some cities, fresh groceries. But Google wants to challenge Amazon's supremacy in the lucrative world of e-commerce.

So much so that the Mountain View, Calif.-based search giant is looking to expand the resources of its Google Shopping Express service, according to a Recode report. The report said Google plans to pour in as much as $500 million, but sources close to Google said that figure is "quite exaggerated."

Shopping Express, first announced in March 2013, lets users buy products from local retailers, and delivers them to their doors the same day or next day.

"You can very much expect that we are putting a lot of money into this and we're excited and willing to sustain that investment over time as this gets going," Tom Fallows, head of Google Shopping Express, told Recode.

Google declined to comment. Amazon did not return a request for comment.

Amazon has already gained traction in bundling its offerings into subscription services. Its popular Prime service, with more than 20 million members, gives users access to a catalog of e-books, streaming movies and music, and free two-day shipping. Prime Fresh, only available in some markets in California and Seattle, includes groceries. Google eventually plans to create a subscription model for its shopping service, according to Fallows.

The push into e-commerce is not only a way for Google to expand its inroads into the grocery business, but also bolster its main cash cow: search advertising. The e-commerce play would give Google more firepower in the realm of product search, where Amazon currently reigns, and would put Google in a better position to sell specialized ads against product listings.

Google's attempt to fortify its e-commerce offerings comes as competitors nip at its heels in mobile search advertising. Google's share of mobile search ad revenue dropped to 68.5 percent in 2013, from 82.8 percent the year before, according to eMarketer.

The reason for the shift, eMarketer explained, is because mobile users tend to go to specific apps when they want to find something, instead of heading to a general search engine. So, shoppers might go specifically to the Amazon app, instead of first Googling an item on their phones.

But while Amazon has often scared physical retailers with its ability to undercut brick-and-mortar stores, Google seeks to position itself as an ally. Instead of operating its own warehouses like Amazon does, Google instead will pick up the items from local stores. The company has already assembled a cadre of big-name partners including Target, Toys "R" Us, Costco, and Walgreens.

While some partners are concerned Google could one day change its operations at the expense of its brick-and-mortar partners, Fallows was adamant that the company would not.

"Google is a platform and partnership business. We can't say that strongly enough," he said.

 

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