The newest addition of the media giant war: Google (Nasdaq: GOOG) is reportedly planning to challenge Amazon.com (Nasdaq: AMZN) in online retail.
The Wall Street Journal reports that Google is looking to delve further into Internet retailing, an area currently dominated by Amazon. Google is reportedly in discussion with "major retailers and shippers to create a service that would let consumers shop for items online, and receive orders within a day for a low fee."
Google is already the world's largest search engine, and it dominates when shoppers are searching for products to buy online. Ensuring that the next steps are taken care of within the Google platform seemed only a matter of time.
Same-day delivery would likely pull consumers away from Amazon, which currently offers Amazon Prime service, a once-yearly $79 fee for two-day shipping for any goods bought on Amazon.
About 40% of Google's revenue comes from retail sources, according to Scot Wingo, chief executive of e-commerce company ChannelAdvisor. He explains that Amazon Prime has been such a big success in recent years that it has begun to threaten this big portion of Google's revenues.
Details
According to the Wall Street Journal's report, Google is in discussion with retailers that include Macy's (M), Gap (NYSE: GPS) and Office Max (NYSE: OMX). The Journal also says Google is planning a test trial in the San Francisco Bay area, which could involve United Parcel Service (NYSE: UPS).
It may be difficult for Google's online retail platform to overtake Amazon, which already owns inventory and runs a massive chain of warehouses. Amazon also tightly controls the process of taking orders and delivering goods.
Google, meanwhile, would be relying on third-party shippers to fulfill orders and provide good service to customers.
Investing ideas
Interested in following or trading on Google, Amazon, and other key players rumored to be involved in Google's bid to take on online retail?
Here are company descriptions of the names mentioned above. Do you think these names have much to win (or loose) by Google's efforts? (Click here to access free, interactive tools to analyze these ideas.)
1. Amazon.com: Operates as an online retailer in North America and internationally. Market cap of $89.64B. The stock has gained 11.67% over the last year.
2. Google: Google is the world's most popular search engine. Market cap of $198.79B. The stock has had a couple of great days, gaining 7.66% over the last week.
3. Gap: Operates as a specialty retailing company. Market cap of $9.60B. The stock has had a couple of great days, gaining 5.67% over the last week.
4. Macy's: Operates department stores and Internet websites in the United States. Market cap of $13.74B. Exhibiting strong upside momentum--currently trading 5.04% above its SMA20, 10.5% above its SMA50, and 20.87% above its SMA200. The stock has had a couple of great days, gaining 8.8% over the last week.
5. OfficeMax: Distributes business-to-business and retail office products. Market cap of $392.71M. This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). The stock is a short squeeze candidate, with a short float at 17.07% (equivalent to 6.38 days of average volume). The stock has had a couple of great days, gaining 7.29% over the last week.
6. United Parcel Service: Provides transportation, logistics, and financial services in the United States and internationally. Market cap of $68.64B. The stock has had a couple of great days, gaining 6.32% over the last week.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman owns shares of AMZN. Data sourced from Finviz.
