Google and Barnes & Noble team up to fight Amazon

According to The Wall Street Journal, two arch rivals of  Amazon.com are uniting to compete in Amazon’s original business – books.

Google said it added Barnes & Noble  to its Google Shopping Express service, which delivers products from retailers including Target,Costco and Staples within hours.

Google’s service covers the San Francisco Bay area, West Los Angeles and Manhattan. Consumers will be able to order books from Barnes & Noble stores in those areas and get them the same day.

Google is competing with Amazon to be shoppers’ primary online destination and merchants’ preferred route to those consumers. Amazon has become a popular first stop on the Web and smartphones for people searching for products, taking away some lucrative search advertising business from Google.

In the past few years, both companies have moved into same-day delivery, trying to compete better against brick-and-mortar stores. Amazon now offers same-day delivery in 12 metro areas.

Google’s Shopping Express white-and-blue vans are seen regularly zipping around the San Francisco Bay Area and Manhattan. Deliveries are free currently, but the company plans to charge for the service in the future.

However, there are questions about how the business can grow profitably. Google stations its own employees inside the stores of its retail partners to accept online orders, pick items from shelves and place them in vans for delivery. That’s a costly approach that may not get cheaper as Google Shopping Express expands. In contrast, Amazon stages deliveries from its big network of warehouses.

“We currently believe Shopping Express loses money on each order,” wrote Piper Jaffray analyst Gene Munster in a research note Thursday. Long-term, he said he expects Google to partner with a logistics company.

Barnes & Noble needs any help it can get in its fight with Amazon. Revenue in the fiscal year ended in May fell 10% from two years earlier, as Amazon’s e-book business, erodes sales of physical books. Barnes & Noble developed its own Nook e-readers and tablets, but that business has struggled and the company is separating it from the store operations.

The partnership, reported earlier by The New York Times , will help Barnes & Noble attract new customers at its local stores, said Jaime Carey, chief merchandising officer for the company.

Carey declined to comment on the terms of the partnership and which company is shouldering the costs, although he said that a Google employee will be stationed at Barnes & Noble stores to process orders.

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