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Google Turns Local Product Searches into Delivery Business

To date, Google product searches have delivered fairly relevant local results, but have failed to translate those results into actual purchases.  Now, Google is introducing a new platform to that helps consumers move from product searches to real-life transactions.

The offering, called Google Shopping Express, allows consumers to buy products from several major participating retailers through Google’s interface. In turn, Google will take a single-digit percentage cut of each transaction and then deliver the purchased product from the physical retail store to the consumer on the same or next day. Instead of operating massive warehouses and store inventory – along the lines of Amazon – Google simply acts as a facilitator of local product transactions.

Currently, the service offers products from the likes of Target, Costco, Toys “R” Us and Whole Foods, and is operational in New York City, San Francisco and Los Angeles. A source told Re/code that Google execs have set aside around $500 million to expand the service nationwide. According to Tom Fallows, head of Google Shopping Express, the company is “willing to sustain that investment over time as this gets going.”

While there is the obvious benefit of using Google to help sell local products, it will be interesting to see how they incorporate small retailers in the mix.  At this point, the service looks well suited for retailers that offer specialty, one-of-a-kind goods that aren’t available anywhere else. On the other hand, the local drug store with common brand name products might struggle to compete with the pricing flexibility of national chains like Walgreens.

Once again, it looks like small local retailers face an uphill battle when it comes to competing with the influence of national retailers.  If Google plans to continue this partnership model for Google Shopping Express, we can only assume that the national brands will have priority over small local retailers that offer the same products with less reach.

We’ll be keeping a close eye on how this new Google offering resonates in the market and what impact it has on local product sales.

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