Can The Google Wal-Mart Partnership Threaten Amazon?
Wal-Mart (NYSE:WMT) is leaving no stone unturned in its bid to take on Amazon in the battle for retail market share. After Amazon acquired Whole Foods, indicating its seriousness in the grocery business and expanding its physical presence, Wal-Mart has been ramping up its digital initiatives to build a technology edge. From patents for “floating warehouses” enabling drone delivery, to pick-up towers to improve in-store pick up, Wal-Mart is ensuring that it does not lag behind in the race. Taking these initiatives a step further, the company is now partnering with Google to offer its products for sale via Google’s voice assistant. Wal-Mart will integrate its products with Google Express, through which customers will be able to place voice orders and get personalized recommendations based on past orders. This appears to be a direct counter to Amazon’s Alexa voice assistant, which allows users to shop on Amazon via voice commands. Wal-Mart is looking to expand its voice shopping capability next year and is likely to bring this experience to its 4,700 stores.
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Amazon is looking to take the grocery shopping experience to another level of convenience through its test of AmazonGo, which allows users to pick up the items they need and walk out of the store – and their Amazon accounts get seamlessly charged for the products they take. However, Wal-Mart is ensuring that it does not lose out on the convenience front along with its core value proposition of offering products at lower prices. Through voice shopping, pick-up discounts, free two-day shipping and low prices, the company is well-poised to maintain and increase its share in the grocery segment. The partnership with Google is a win-win situation for both companies. Google’s expertise in natural language processing and artificial intelligence can ensure that a high quality voice shopping experience is delivered via its voice assistant. Further, as Google is looking to expand in the home smart speaker segment and compete effectively with Amazon’s Echo, a voice shopping experience through its assistant can be an attractive feature.
Both Google and Wal-Mart are competing with Amazon in different segments. This partnership indicates that both players are willing to combine their strengths to take on the e-commerce giant. While we do not expect this partnership to threaten Amazon meaningfully, given its strong user base, deep pockets and technological expertise, it is a sign that Amazon is going to face some tough competition going forward.
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