The world of retail is undergoing a paradigm shift, and while it can't all be blamed on Amazon.com, Inc. (NASDAQ: AMZN), the online juggernaut has certainly played a part. The company has changed consumer's expectations, pushing instant gratification as the new normal. Shoppers can find virtually anything on an e-commerce site, and many items arrive within two days or sooner for Amazon Prime members.
This new reality has other retailers scrambling in an attempt to find the right balance between market share and profitability and has also resulted in some unlikely alliances as companies fortify their positions to stave off the continuing encroachment by Amazon.
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Wal-Mart Stores, Inc. (NYSE: WMT) and Google, a division of Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG), have partnered on a number of strategies designed to better compete with the e-commerce giant.
The two companies announced that beginning in September, hundreds of thousands of products sold by Wal-Mart would be available via voice shopping using the Google Assistant. Customers can use either Google Express, the company's online shopping website, mobile app or the Google Home smart speaker and link their Wal-Mart account. This will enable them to use Wal-Mart's Easy Reorder feature and receive personalized shopping tips based on previous online and in-store purchases.
Google also announced that "Starting today, we're offering free delivery on Google Express as long as your order is above each store's minimum." The company's online shopping mall is a consortium of 30 retailers including Target and Bed Bath & Beyond, which allows consumers to shop multiple stores all from the Google Express website.
The service previously charged a membership fee $95 per year or $10 per month. Ironically, press releases from Google and Wal-Mart both said, "There's no membership required," in a clear shot at Amazon.
As an additional perk, shoppers who buy Google Home speakers will receive a $25 discount on their next Wal-Mart order if they link their account with Google Express.
My enemy's enemy is my friend
Amazon competes with both companies to varying degrees, though some may not be quite so obvious.
A study released late last year by personalization platform company BloomReach details one. A survey of over 2,000 consumers revealed that 55% of shoppers start on Amazon's website when searching for products online. More than 89% of Google's revenue comes from search advertising, so changes in consumer behavior could erode the search giant's dominance over time.
Voice-activated shopping has also become increasingly popular with consumers since the debut of Amazon's Echo smart speaker in 2014. A recent survey conducted by RBC Capital Markets of Amazon customers found that 17% use the Alexa-enabled devices to order products from the e-commerce website. The Google Home speaker was finally released last year after Echo had the market to itself for two years, and Google is eager to make its mark in the voice shopping market.
Just the beginning
Wal-Mart is in the midst of a far-reaching transformation that began with the purchase of Jet.com and the hiring of its founder, Marc Lore, to head its e-commerce operations. The company has introduced Pickup, a service that allows customers to receive discounts on items they order online and pick them up at a nearby store, noting that "90% of Americans live within 10 miles of a Walmart store."
Wal-Mart also recently acquired New York-based Parcel, a delivery company that serves online retailers and meal-kit companies. It plans to use the service to expand its same-day and next-day deliveries in the area.
As the battle for retail supremacy rages, success will be enjoyed by those that find new and innovative solutions to serve their customers. Wal-Mart says this is just the beginning, and it plans to "create customer experiences that don't currently exist." That might just help the company continue to compete in this brave new world.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares) and Amazon and has the following options: short December 2017 $75 calls on Wal-Mart Stores and long January 2018 $57.50 calls on Wal-Mart Stores. The Motley Fool owns shares of and recommends Alphabet (A and C shares) and Amazon. The Motley Fool has a disclosure policy.