It’s the end of the calendar work week and we continue with our news update series related to previous Supply Chain Matters posted commentaries or news developments. In this capsule commentary, we include the following topics: Google Shopping Express, Typhoon Impacts Japan, Accellos and High Jump Software Merge.
Google Shopping Express
While there is lots of attention being directed at Amazon, Wal-Mart and other online retailer same-day delivery capabilities, Google is about to invest serious money to provide its own capabilities.
A posting on ReCode.net: Inside Google’s Big Plan to Race Amazon to Your Door, Jason Del Ray writes that the Google Shopping Express service has been piloting in select cities and is about to receive some serious investment money from Google. He writes that the search provider who has been displaying local shopping results is now coupling a same-day delivery capability.
Rather than operating a network of physical fulfillment centers, Google will rely on inventory from local retail outlets. Rather than compete directly with retailers, Google’s thrust is to become an ally and complement a retailer’s local brick and mortar presence. Shoppers in select cities visit a dedicated web site and select the goods such as groceries, clothing or consumer staples, that they desire to purchase. A network of local couriers is then marshalled to pick-up the goods at local retailers and delivers them. Del Rey indicates initial retail partners are Costco, Target, Toys ‘R” Us and Whole Foods. For its efforts Google charges retailers a transaction fee while consumers pay a $4.99 delivery charge. Eventually, Google plans to charge shoppers a flat membership fee, similar to Amazon Prime. Retailers themselves are reported to be taking a cautious approach to the service for fear that that Google may assume more of the direct consumer connection including the mining of valuable shopping trends.
The posting cites a source familiar with the company’s plans indicating that Google executives have set aside upwards of $500 million to expand the service nationwide. That obviously, is some serious money when one considers that the model does not require inventory or warehouse investments. This will be an important area to watch for B2C online fulfillment.
Typhoon Neoguri Continues to Impact Japan
After slamming the southern islands island of Okinawa, Typhoon Neoguri has continued on a path across the main island areas of Japan and is being classified as the most severe storm to have impacted the country in the past 15 years. While the storm was recently downgraded to a tropical storm, there remains a concern for very heavy rains and subsequent flooding. According to the latest media reports, this storm is likely to reach areas near the tsunami-crippled Fukushima nuclear power plant sometime today.
Neoguri impacted the mainland yesterday near Akune City on the southern main island of Kyushu, which is home to 13 million people. Kyushi lies next to the country’s biggest island of Honshu where major cities including Tokyo and Osaka are located which could also be impacted by the storm. The storm’s strength weakened somewhat overnight, packing gusts of up to 126 kilometres (80 miles) per hour as it moved east. Latest reports indicate that the storm passed just to the southeast of Tokyo but concerns remain for torrential rains and landslides across the country.
Although the storm does not represent the massive supply chain impacts that occurred from the 2011 earthquake and subsequent tsunami that impacted the country, there could be some impacts depending on the amount of flooding, landslides or other damage to factories or transportation infrastructure.
The next few months represent the monsoon season across eastern and coastal Asia and this may just be the beginning of other super storms.
High Jump Software Acquired by Accellos
Warehouse and logistics management software providers Accellos Software and High Jump Software have announced a merger, but that appears very much like an acquisition. According to the announcement, “the combination of the two companies creates a product portfolio that is uniquely positioned to meet the advancing needs of retailers, distributors, manufacturers, and logistics service providers to manage complex order fulfillment cycles and collaborate with supply chain partners.” The merged company will operate under the name HighJump and continue to use the Accellos brand for midmarket supply chain execution technology. Accellos founder and CEO Michael Cornell was appointed CEO of the merged company. Terms of this merger have not been disclosed.
A posting on the Minnesota based StarTribune news site headlines the merger as an acquisition. It notes that the merger is driven in large part by the need among retailers for added online fulfillment process flexibilities including the ability to deliver goods quickly from a warehouse, as an online-only retailer would, if such goods are not available in a store. Both High Jump and Accellos have backing from respective private equity partners which implies that this was an engineered marriage.
Very good article regarding Google’s plan to compete against Amazon in the home delivery sector. Instead of investing in fulfillment centers filled with assets & inventory investments such as Amazon.
Google rather planning to offer on line ordering with home delivery service working with local retailers within geographical areas thru a courier service that picks up from the retailers that will make the home delivery. They plan on partnering with the retailers using those existing invested asset base of buildings & inventories.
As the larger retailers are moving in the direction of offering home deliver as well & many having them. I think most retailers would be concerned about Google gaining access to their direct customer’s buying patterns & history base through one line purchasing in Google’s web site vs. the retailer’s web page. One day through historical category mgmt via software Google like Amazon could try pull customers away from retailers.
However having said that there are two things I believe will drive this. Most company’s manage the balance sheet ROI quarterly. So the retailers will see this as a means to grow their sales via a means to reach demographics that normally don’t shop at their stores or as often as they need them to to sustain themselves. Purchases through a successful web base partner that has a bigger name brand than theirs would open that door but it could be also be at the risk of their own Brand. But into todays business landscape sales are sales for those counting the beans & managing the return. But for the consumer the generation coming up it’s more about diversity, inclusion & technologies to make things happen faster which the emotional speak to their consciousness i’m making a difference that will make a difference.
Google will grow in sales by tapping into new market sectors such as dry & fresh groceries at a lower cost of entry than their competitor Amazon.
So my question is who’s Brand name goes on the courier fleet? Google’s or Google’s & their retail partners like a NASCAR.
If Google is smart which I believe they are their courier system will have their partners names on them ss well (inclusive branding) & will be done with 100% electric vehicles as that technology is now in place. Google should work with cities this new courier division of theirs will be implemented in for the appropriate “green” tax breaks. As here in California for companies that use windmill or solar power for powering their businesses. These tax breaks would help offset Google’s investment cost ongoing where Amazon’s will not. Google should share those monies with their retail patners to assure the long term partnership (inclusion) as well as market a green campaign which Amazon does not offer.
Long term there is always the risk of Google going direct & retailers can shut down just because of things within demographic changes in any given location where their competitors have learned to service those needs of the community better than them.
However this venture goes one thing remains true; you can take distribution out of the supply chain but these businesses can not take the COST of DISTRIBUTION out of their home delivery supply chain. But they can certainly manage it differently to a longer more sustainable end in my humble opinion.
If Google & their retail partners need fulfillment prior to delivery without the asset costs that’s where my company can help with 70 locations across the US & 12 in Mexico.
Best of life to them & our free capital system of doing business.
Michael Michelucci
Regional sales Mgr. No. Ca – mmichelucci@goldenstatecontainer. Com
Victory Packaging/Golden State Container
VP name (US, Canada & Mexico)
GSC name (California only)
Michael- thanks for sharing your comments.
Having different branding affixed to the courier fleet would indeed be interesting and different.
I also agree with your observation that the cost of distribution will remain the fundamental issue. That stated, Google’s approach is different and could garner some traction.
Bob Ferrari