Google Express vs. Amazon – Deep Dive into Same Day Delivery Part II/II

October 21, 2014

ChannelAdvisor Scot Wingo By Scot Wingo

This is part 2 of 2 part series exploring Google’s strategy to take on Amazon with Google Express (GX)

Introducing the Marketplace Comparison Framework – a methodology for scorecarding marketplaces.

When comparing different marketplaces, a framework that allows us to analyse each marketplace across measurable helps not only with the comparison, but also to understand the “DNA” of the marketplace.  Is it focused on value, selection or both? Where does it stand on customer service and other aspects?

For this blog post, we are introducing the Marketplace Comparison Framework (MCF):


There are five main components of the MCF detailed above: Selection, Value, Convenience/User Experience (UX), Trust and Merchant Experience.

The next sections take Amazon and Google Express through the five components of the MCF to see how they rank.

Selection – Amazon vs. Google

Getting apples to apples on selection for Amazon is a big tricky, but we can get there, it requires a bit of backstory and research, but we’ll learn a lot about both companies and services on the way.

Selection – Amazon

When Amazon initially launched their 3P marketplace, the key value proposition was an explosion of selection and as you will see that has clearly been the result.

One of the top internet stock analysts, Colin Sebastian with RW Baird publishes a quarterly inventory survey for Amazon.  The data in this section is from his latest Q3 update.   It’s important to understand that Amazon is unique in the world of e-commerce, because it is the only companythat has invested (very big $$) in a ‘global catalogueueue’.  What this means is when I search for something on Amazon, instead of seeing an offer for that from a bunch of merchants – I see one product, the ‘golden product’ and then I see the offers for that very specific product.  The simple example is pick an iPad.  This is the golden listing for Amazon’s iPad:


This allows the shopper to: 1. find the product they want, 2. pick the offer with confidence they are getting the product they want.  It also significantly de-clutters the search experience.

Here’s the same search on eBay.  Note there are 2,653 results, and if we were to go through all of those, you would find many, if not the majority of them, actually are not iPad Air 2’s.


I mention this because when we talk about selection on Amazon, we are talking about SKUs (from the global catalogueueue) and not ‘listings’.  The reason this matters is clear from the iPad Air 2 exmaple above – Amazon hasselection of 1 and eBay has selection of 2,653 – so to make this apples to apples, we’d have to figure out all of the offers for the Amazon SKU (ends up being about 750 for this iPad in all the different possible configs/colours).

With that background, Amazon has four buckets of selection:

  1. Amazon 1P – This is where Amazon is the retailer. We call that ‘first party’ or abbreviated 1P.  All of this product is ‘Prime enabled’ or Prime’d as they like to say internally at Amazon.
  2. Amazon 3P – This is where Amazon is the marketplace and a third party (that’s where the 3P is from).
  3. Amazon Prime – Some of the 3P sellers can optionally choose to have their products fulfilled by Amazon (aka FBA) and they become Prime’d.  Think of this as 1P+FBA.
  4. Amazon FBA – The difference between all the SKUs that are Prime’d and Amazon 1P is the set of 3P sellers utilising FBA.

Note: To make this apples to apples I have only counted physical product (excludes ebooks, mp3 and all digital assets).

Ok, drum roll, here is where Amazon stacks on this as of Q3:

  • Amazon 1P – 26,000,000
  • Amazon 3P FBA – 5,000,000
  • Amazon Prime – (1P+FBA) – 31,000,000
  • Amazon 3P – 235,000,000
  • Amazon total (1P+3P) – 261,000,000

Bazinga! That is lot of products for sale -plus this is just SKUs if we looked at ‘offers’ or ‘listings’ it would easily be 10X (2.6B!) Here’s what this looks like graphically:


For the purposes of this post where we are comparing same day delivery options:

  • Delivery time outside of Prime: 230m (261-31m Prime’d)
  • Delivery time inside Prime: 31m

Amazon offers same day delivery in 13 metros and the products have to be in Prime and in the DC near the consumer.  There isn’t any data or way to know how many of those 31m products are near the consumer at the time of delivery, but if we assume 25%-50% we get to 7m-15m for the purposes of this post.

Amazon Selection – avoiding the CRAP

One last fun fact about Amazon’s selection before we dive into Google Express.  Although you probably wouldn’t think it looking at their overall corporate profits, Amazon is on version 10 of their thinking around product profitability.  About 5yr ago they introduced the concept of products that are CRAP – Can’t realise A Profit (this is their actual internal name, seriously).  These are products that when you look at the inputs of ASP, margin, size, weight and shipping costs can never realise  product.  When you do the math on this you end up with a heat map that looks like this:


(Source: ChannelAdvisor estimates)

Green products you love and sell all day, yellow you get more picky with and red you avoid like the plague because you lose money on every unit.  As you can tell CRAP products are in the < $20 ASP, and tend to be some combination of low margin, heavy or big (volume impacts shipping and storage costs).  Examples of CRAP products would be: bottled water, detergent, dry dog food, low ASP paper products, a pack of cards, a single tube of mascara, etc. Don’t believe me? Go find a bottle of Tide on Amazon (pods don’t count).

There are a couple of ways to turn CRAP products into profitable products:

  1. Bundle a bunch of them together and ship the package ground.  That’s the rational behind  Amazon Prime Pantry
  2. Have them ride along with non-CRAP products ‘for free’  if there is room in a box that costs Amazon $6 on shipping and several CRAP products ride along, that is actually package-accretive.  That’s the rational behind Amazon  add-on items.
  3. Charge for shipping.
  4. If you happen to have a truck going to someone’s house 2-3 times a week do delivery groceries, then everything else you deliver (even CRAP) is accretive to that truck stop.  This is the rational behind Amazon Prime Fresh.




The bulk of CRAP products tend to be what is commonly called ‘everyday essentials’  – the non-grocery, non sporting goods, non-electronics items you would go to a Target or Walmart for.  What’s interesting is, the Amazon profitability engine is smart enough to know not to show me the Tide that is clearly in my FC unless I’m in Fresh mode (where it rides along with the broccoli and salmon) or Amazon Prime mode.

Conclusion: Amazon offers 7-15m items across 13 metros and does some very intelligent thinking around product profitability.  Amazon understands unit economics and ‘package accretivity” down to many many decimal places.

Selection – Google Express

At the time of this blog post, GX supports these 8 regions:


Unfortunately , there isn’t a handy  inventory survey for GX (come on Colin!!), so we had to roll up our sleeves and do our own.  Here’s how it works.  We loaded a valid address into GX for every region.  Then we iterated through each region and documented the retailers in the program for that region and then looked at the number of offers for the retailer in that region.  Here’s a table that shows the matrix of stores in each region (click to enlarge)


A couple of observations:

  • Boston has the fewest merchants – 9
  • Nor Cal has the most – 28
  • There are a total of 37 retailers in the program across all metros
  • There are six retailers (highlighted in green) particating in all regions: Babies R Us, Costco, L’Occitane, Staples, Toys R US and Walgreens.

Selection – Advantage?



Value – Amazon vs. Google


Convenience/User Experience – Amazon vs. Google


Trust – Amazon vs. Google



Merchant Experience – Amazon vs. Google


Scorecard: Amazon vs. Google