Ok, Google and Walmart say: Hey Alexa, it’s Game on!

On what seems to be a battle of the Goliaths, Walmart has surprisingly teamed with an unlikely ally, Google.

No matter what the outcome, the stage is set for an epic fight — the one like the recent Mayweather vs. McGregor, also known as the “The Money Fight.”

With the total US online market expected to be close to $390B and the total US Grocery market estimated to be $100B by 2025, of which 20% is expected to be online, I say this fight certainly has a lot of money riding on it. I have my favorite, let’s see if you pick one by the time you finish reading this piece.

What does this partnership mean?

Google currently runs a service called Google Express, which is a delivery service and now offers same-day and overnight delivery of goods from traditional retailers such as Costco, Target, Staples, Kohl’s, PetSmart and many others.

So why is Walmart joining this extensive list such a big deal? Well, it’s a unique partnership where customers will be able to use Walmart’s account to place orders through the Google Voice based system, called the ‘Google-Home,’ and in return, Google will access all the purchase history. Google will use this data to make personalized recommendations by doing what it does best — making sense of data with its leading AI. It’s the coming together of AI and Hardware power of Google with Logistics and Retail power of Walmart. And that’s a big deal.

It is a marriage of two opposites, companies with different DNAs and core strengths. But that’s what makes it a good marriage; One where complementary skills come together to fend off a common enemy — Amazon.

So Who is likely to win this fight?

While it’s a bit early to call, I see this as a 3 round fight and am placing my early bets:

Round 1: Protect your turf

Both Walmart and Google are fighting their respective battles against Amazon, which seems to be trailblazing through the new-age retail and seems to have limitless momentum with over 60% of the US households now hooked on to its products and services through its Prime Membership.

While Walmart is still the largest retailer in the world ($485 Billion in revenue), it faces an uphill battle to protect its market share. With online sales growing at double digits (while offline sales at a meager 1–2%) and Amazon accounting for more than 50% of online sales growth in the US, there is no doubt that Walmart stands to lose a lot, if it doesn’t fend off the punches.

Secondly, with Amazon’s recent acquisition of Whole Foods, Amazon has made it clear that it is now going after the remaining 90% (offline) of the retail market. And it’s unlikely that Amazon will stop at Whole Foods.

What if Amazon buys CVS (one of the largest pharmacies in the US), Best Buy (the largest electronic retailer), and Nordstrom (one of the best premium retailer) and connects all of them through a seamless wrapper of Prime Membership coupled with the Amazon Go technology? The positions could easily flip over the next decade. This fear is enough to keep the Walmart executives up at night.

For Google, its most profitable business — Search is under attack by Amazon. Not many know that Amazon is now the number two searched engine in the US with over 55% of consumers starting their product searches on Amazon vs. Google, where this figure has declined to 28% from 34%, the prior year. Plus Amazon has a ton of shopping data to match the search data and can tailor those searches better to influence the consumer purchase decision. So this is Google’s attempt to bolt on a massive catalog that can keep the customers from moving away from searching on Google.

The Prediction — Round 1:

Round 1, in my opinion, will go to Amazon as it will continue to gain market-share because it doesn’t need to make money in its retail business and has trained Wall Street on rewarding growth and innovation at the cost of profitability. Besides, it has a very profitable business in AWS that can continue to subsidize and power its growth. These factors make Amazon extremely hard to slow down — so the real question is how much damage can it do and how quickly?

Amazon — 1 | Google X Walmart — 0

Round 2: Gain a new advantage

The advantage up for grabs here is the Voice-based-shopping, which seems to be future. It has the potential to be really big, especially for the lower value-high frequency items we buy.

After all, Voice is the new UI.

Here’s why:

i. Close to 30M people in the US already use some form voice assistant every month, and over 20% Google searches in the US are voice based searches. These facts show that the customers are embracing Voice as a UI with both arms open.

ii. The e-commerce market is estimated to be $390 Billion (Source: Emarketer) and voice enabled purchases are only $250M (less 0.1% — Sapient Nitro) so there is a long way to go from a penetration perspective.

iii. Speaking is most the natural and human way of conveying executable commands. If the quality of speech recognition and the number of use-cases for such an application increase, which they most certainly will, then we could see a massive adoption, just like the one we saw for smartphones.

iv. The new voice first devices such as the Amazon Echo, Google Home, and the Apple Homepod, will most likely become the controlling hub for all of your devices at home. They will connect to your refrigerator, TV, lights, subscriptions services and much more. Since these are all competing for the same table space, it is not only important to get there first but also to stay relevant.

Hence, whichever company can build the largest eco-system of applications and services to support its hardware, is likely to have the advantage in the long run.

Although the market is large enough to sustain more than one player, we can see that Amazon has a head-start. Over 82% of the voice-first device market is owned by Amazon Echo (with its Artificial Assistant called Alexa) with Google Home at about 18%, and all the other account for a negligible amount.

Even though Google is the leader in NLP and AI with all its horsepower from its search engines and years of data, this one is going to be a tough one to fight. My guess is that Amazon Echo will remain to the be the leading device but at some point, developers will build bridges (applications) to access multiple assistants from one device such that they can perform actions across platforms much like one can access Apple Music now even from an Android device. This is evident in the recently announced partnership between Amazon and Microsoft where two will work on integrating their respective AI assistants. Therefore the device will become less important than the data and the applications powering its intelligence.

The Prediction: Round 2

Although it’s going to be close, Amazon will take this round because:

i. Alexa is already becoming more than just an ordering tool for a lot of its users and has established a large fan following.

ii. Alexa doesn’t need any training on my buying preferences since Amazon already has a lot of data on my past purchases. So when I say: “Alexa, order me some AAA batteries.” It knows which brand of batteries I buy. On the other hand, Google Home needs to be trained when buying items from Walmart as most people may not currently use Google for shopping given the limited catalog.

iii. It is more likely that someone who owns a Google Home device shops at Amazon than it is that he or she does at Walmart. This begs the question that does the availability of the Walmart Catalog over the Google Device encourage customers, who are not a typical Walmart customers, to start shopping at Walmart? This is quite unlikely especially because the overlap between a customer who owns Google Home and shops at Walmart should be quite minimal.

The day is not far when Amazon will hand out the Echo device free with the $99 Prime Membership and at that point, it is more likely that some people will have two devices but will use them for different purposes, with Amazon Echo being the preferred device for Shopping. Google doesn’t have a retail business to subsidize this hardware cost. Advantage — Amazon.

Amazon — 2 | Google X Walmart — 0

Round 3: Go for the kill

In the end, this will be a race for data.

“The company that owns the shopping list will own the customer.”

Here are two scenarios:

i. Imagine going to Whole Foods to get fruits, meats, and vegetables, plus other cool impulse buys, but also at your checkout having a bag of your monthly automated items waiting for you. Then with the Amazon Go technology, you pick up your items and just walk out. Amazon has complete control over the data as well as the logistics to be able to revolutionize your shopping.

ii. Similarly, imagine that you searched for a Barbeque Grill on Google and 2 hours later, it sends a Walmart offer on Grills (only the ones locally available since it has access to inventory) with a free same day delivery through Google Express. Google can marry your searches and email data with the supply side to create dynamic, relevant and contextual offers that have a high probability of converting.

I’m also predicting that Google’s partnership with Walmart is first of many to come. It will likely partner with several large retailers who are equally worried about “The Amazon Effect” and need an ultimate savior.

Considering the existing strengths of Google and Amazon’s strong hold on the online shopping market, I think this one is a tie (both get a point each) for now, and a lot will depend on how the Google Partnership pans out.

Amazon — 3 | Google X Walmart — 1

In the end, if the battle is for retail dominance where voice led AI plays a significant role in retaining and growing customers, my money is on Amazon, for several reasons, but most importantly for its innovation across the supply chain and for building moats around its business through its Prime Membership. I don’t see another player building such a value proposition, which is getting stronger by the day, in the near-mid term.

Hence, this one is for Amazon (Mayweather) and since this is not winner take all game, Google X Walmart (McGregor) will also get its fair share just like it happened in the real fight (Mayweather got a $100M and McGregor got $30M).

Who are you betting on?



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Amit Rawal

Amit Rawal

@Apple Inc — Global Product Leader for new-age Data and Analytics Platform. Love using tech and data to deliver joy.