Google and Facebook made their names by helping people find
information or friends online. But in recent weeks the two
rivals have made some surprising moves in a different
direction - the business of selling and delivering goods.
Facebook is trumpeting its new Gifts service that lets users
order a wide range of stuff, from wine and cupcakes to pet
toys and children's clothes, and have them delivered to
Google, meanwhile, has been tight-lipped about its recent
deal to buy a small company that operates temporary lockers
where shoppers can take delivery of items they purchase
online. But some believe Google will combine the startup's
delivery expertise with other services to help merchants sell
products through Google.
Each venture is new and faces challenges. But if today's
e-commerce is dominated by well-known retailers like Amazon
and Walmart, analysts say Google and Facebook may see these
initiatives as both a potential source for new revenue and a
strategy for keeping their users engaged - while giving
people one less reason to visit Amazon or competing sites.
"These companies want to keep people from leaving. They would
love to have a complete ecosystem where they own every part
of the customer experience, from browsing to buying and
repeat visits," said Sucharita Mulpuru, an e-commerce expert
at the Forrester tech research firm.
Google in particular may have reason to be concerned. While
it still dominates the business of selling advertising keyed
to Internet search queries, online shoppers today are more
likely to start their quests on Amazon than Google, according
to some studies. If that trend continues, analysts warn, it
could make Google's site less attractive to retail
Facebook also has good reasons to offer shopping on its site,
as the social network seeks to broaden its business beyond
selling advertising and games. Facebook made Gifts available
to all U.S. users in December.
But Sterne Agee investment analyst Arvind Bhatia estimated
the program could become a significant revenue source,
contributing "several hundred million dollars" of annual
Facebook isn't selling its own products; instead it partnered
with big chains and independent merchants that sell items
through the Gifts program and give Facebook a cut of the
proceeds. Facebook won't say how much, although Bhatia
believes the cut is 10 to 15 percent.
After a customer places an order on Facebook, most of the
partners handle their own processing and delivery. But
Facebook said it's operating a small warehouse to store and
ship goods from smaller partners that don't have their own
While Facebook seems unlikely to match the size and scale of
a retail giant like Amazon, Gartner tech analyst Brian Blau
said the social network has a tremendous advantage in the
information it has about each user's friends, their personal
interests and important dates like birthdays and
anniversaries, all of which can be used to nudge people into
"The act of gift-buying is a very social activity," said
Blau, adding that Facebook could eventually sell other
products, such as concert souvenirs or clothing, that people
talk about with their friends.
Others are sceptical. People visit Facebook to interact with
friends, not to buy things, said Mulpuru, who added that
online companies like RedEnvelope have had little success in
building a business around suggesting gifts for friends.
Google, meanwhile, has already waded into retail commerce. In
addition to selling digital goods such as music and videos
through its Google Play online store, the company has
experimented with electronic payments through the Google
Wallet service, launched a daily-deals program called Google
Offers and revamped its shopping-search service by shifting
to a model where merchants pay to have their products listed.
But the search giant has said little about its late-November
purchase of the Canadian startup BufferBox, which operates
lockers at locations such as transit stations and grocery
stores. Online shoppers can have items shipped to a locker
that's secured with a temporary PIN code, and pick them up
later if they're not able to be home for delivery.
Google has also been quietly testing plans for same-day
delivery service in San Francisco, according to reports
citing unnamed sources. As described in The New York Times,
Google may contract with courier companies to deliver
merchandise that customers order from Google's retail
A Google spokeswoman declined comment on those reports and
wouldn't discuss plans for BufferBox, except to say, "We want
to remove as much friction as possible from the shopping
experience, while helping consumers save time and money."
But analysts say it makes sense to offer a fast-delivery
service for people who purchase items through Google, since
rivals such as Amazon, Walmart.com and eBay have similar
programs. "It could be attractive for retailers who advertise
on Google," said Kerry Rice, who follows Internet business
for Needham & Company. "It's another thing that a company
could use to highlight their listing in Google's results."
It's unclear if Google will offer delivery service on a broad
scale. Amazon has experimented with delivery lockers, but
Mulpuru said the concept has yet to catch on. "These tech
companies throw a lot of stuff against the wall, just to see
what works," she added.