Walmart and Google Team Up to Take on Amazon’s Alexa

Walmart (NYSE:WMT) he fought back Amazon (NASDAQ: AMZN) in recent years, it has expanded its e-commerce ecosystem by offering new free shipping, delivery and pickup options and transforming its brick-and-mortar stores into fulfillment centers.

But Walmart lacked two of Amazon’s strengths: Amazon Prime, which ties users to a growing list of benefits, and Alexa, which ties consumers to its services through voice search. But Walmart’s new partnership with Alphabet‘S (NASDAQ:GOOG) (NASDAQ: GOOGL) Google could help counter Alexa.

Photo source: Getty Images.

Walmart recently announced that it will allow shoppers to purchase products through Google Assistant, which works on Google Home devices, set-top boxes, Android devices and even iPhones. Shoppers can add products to their carts by saying, “Hey Google, talk to Walmart.” Will this partnership help Walmart and Google take on Alexa?

How This Deal Helps Walmart

Walmart’s e-commerce expansion, including adding more products to online stores, aligning prices with Amazon and acquiring a long list of digitally native brands — increased their U.S. e-commerce revenue by 40% in fiscal 2019. That figure is expected to grow another 35% in fiscal 2020, which began Jan. 31.

Walmart’s e-commerce revenue is a tiny percentage of its total sales. eMarketer predicts the company will control less than 5% of the U.S. e-commerce market this year, compared with Amazon’s 47%.

But Walmart’s digital arm keeps the brand relevant, attracts outside vendors to expand the range of products available online, and helps the company expand into next-generation markets like driverless deliveries and voice shopping. Tying the e-commerce platform to Google Assistant, which is now available on more than a billion devices worldwide, clearly complements that strategy. Amazon’s Alexa only works on about 100 million devices.

How this deal helps Google

Google dominates the online search market, but has repeatedly failed to break into e-commerce. Its primary e-commerce platform is Google Express, which fulfills orders for third-party retailers such as Objective AND Costco.

Google Express got lost in the crowd as larger retailers launched their own delivery and collection options. The number of participating retailers fell after its 2013 launch, and the company struggled to keep its contracted courier services on the same page. Last year Gizmodo is Bryan Menegus lamented that Google Express’s fragmented and confusing ecosystem has made it a “glorified payments processor” rather than an “Amazon killer.”

But solid sales of Google Home, which competes with Amazon Echo, could give the company a second chance at e-commerce. eMarketer predicts that Google Home’s share of the U.S. smart speaker market will grow from 29.5% in 2018 to 31% in 2019. Amazon’s share is expected to fall from 66.6% to 63.3%.

Image source: Google.

eMarketer estimates that the total number of people in the U.S. using smart speakers will grow 15% this year to 74.2 million, and that more than a quarter of American adults will use one at least once a month by the end of the year. So combining Walmart’s e-commerce platform with Google Assistant could help both companies gain a foothold in the fledgling voice-shopping market.

A small but growing market

The Walmart-Google partnership makes strategic sense, but most smart speaker users don’t yet use their devices to make purchases. Last August information claims that just 2% of Alexa-enabled devices use voice-activated shopping features.

But shopping habits continue to evolve. Amazon said voice shopping on Alexa “more than tripled” last year during the holiday season. In February of this year Adobe the survey found that 26% of respondents have purchased products or placed orders using smart speakers.

These numbers suggest that Walmart could eventually reach more shoppers than Amazon through voice search, since Google Assistant works on more devices than Alexa. If Walmart’s attempt at voice shopping proves successful, other retailers (including those that abandoned Google Express) could consider partnering with the tech giant again.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, CEO of Alphabet, is a member of The Motley Fool’s board of directors. Leo Sun has no holdings in any of the stocks mentioned. The Motley Fool owns stock in and recommends Alphabet (A and C shares), Amazon, and Costco Wholesale. The Motley Fool recommends Adobe Systems. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com