Google and Barnes & Noble have joined forces against Amazon by offering same-day book delivery in Manhattan, San Francisco, and West Los Angeles. Google will deliver Barnes & Noble's books through its delivery service, Google Shopping Express. The delivery fee will be $4.99 per book, although Google is waiving the fee for the first six months.
While the partnership between Google and Barnes & Noble is unique, same-day book deliveries seem much more expensive and less convenient than downloading an e-book from Amazon. Let's take a look at the logic behind this strategy to see if it can actually work.
Source: Wikimedia Commons.
Who needs same-day book deliveries?
Despite the rising popularity of e-books, print books are still more popular. According to Princeton Survey Research Associates, 70% of Americans read print books in 2013, and only 4% exclusively read e-books. The average American reads five books a year, and half currently own an e-reader or a tablet -- a 7% increase from 2012.
While Americans continue reading both print and digital books, it's hard to ignore the differences in price and convenience. Gayle Forman's If I Stay , currently the best-selling book on Amazon, costs $5 on the Kindle but $11 for the print version. Veronica Roth's Divergent costs $5 on the Kindle, versus $10 for the print version.
Meanwhile, Amazon's Kindle Unlimited program, an "all you can read" subscription program for $9.99 a month, is an economical choice for anyone who reads more than two e-books per month. E-books can also include built-in dictionaries, have social sharing features, and can be automatically synchronized between multiple devices.
Even for Americans who still love print books, it's hard to justify the future $4.99 delivery fee from Google Shopping Express. Since a print book can be twice as expensive as the e-book, the price of a same-day delivery fee could triple the price. Moreover, $5 in fuel at today's gas prices is worth approximately 35 miles of travel in an average car -- making it a silly option compared to simply driving to a brick-and-mortar bookstore.
What this partnership means for Google
Despite these pricing issues,the company has invested up to $500 million to expand Google Shopping Express nationwide.
The idea is simple -- shoppers orders things from local brick-and-mortar retailers through Google, which delivers them the same or next day via a fleet of branded vans. Google's partners include Target , Walgreen , Costco , Whole Foods Market , and others, which offer the same prices online as they do in brick-and-mortar stores. Google is absorbing the costs of hiring contract drivers and covering fuel costs for now, but it will eventually decide on a subscription rate after the six-month trial period. Therefore, the $4.99 per shipment price could simply be a placeholder rate until Google accurately gauges demand for the service.
Amazon's rival service, Amazon Fresh , charges Prime ($99 per year) members $5.99 and other customers $9.98 per same-day delivery. Amazon recently expanded same-day delivery to six more cities -- Baltimore, Dallas, Indianapolis, New York City, Philadelphia, and Washington, D.C. Amazon also offers Prime Fresh, a $299 per year package, which merges Prime benefits -- free two-day delivery on select items, the free Kindle e-book lending library, and unlimited video streaming -- with free same-day and early morning delivery on orders over $35. However, Prime Fresh is available only in metro areas in northern and southern California.
When the six-month trial ends, it could be hard for Google to price its service competitively against Amazon, since it can't offer comparable benefits to Prime. Yet I believe that Google is probably willing to run Shopping Express at a loss to keep pace with Amazon and collect data on shopping habits.
What this partnership means for Barnes & Noble
It doesn't really matter to Google whether or not same-day book deliveries take off, since it simply handles the deliveries. But for Barnes & Noble investors, anything is worth trying at this point. The company closed 63 stores in the past year, and will spin off its slumping Nook e-reader unit, which Microsoft unsuccessfully tried to revive.
In fiscal 2014, revenue at Barnes & Noble's retail business fell 6% over 2013. Its college textbook business fell 0.9%, while its Nook business plunged 35.2%. Barnes & Noble's full-year revenue of $6.4 billion represents a 6.7% decline from fiscal 2013 and 10.5% decline from 2012. By comparison, Amazon's fiscal 2013 revenue rose 22% to $74.5 billion. In other words, Americans might be reading print books, but they're likely ordering them from Amazon instead of Barnes & Noble.
On the bright side, Barnes & Noble's presence as Google Shopping Express' only bookstore could help it brush off its reputation as the musty has-been more commonly associated with Borders than Amazon.
The Foolish takeaway
In conclusion, Google's partnership with Barnes & Noble is an interesting attempt to compete against Amazon's book and same-day delivery businesses, but it will probably succeed at neither.
Google might be the king of search, but Amazon is still the king of product searches and e-commerce. It's going to take much more than a handful of brick-and-mortar partners and contracted vans to compete against Amazon. In the short term, free shipping for physical books could help Barnes & Noble, but I doubt that sales will keep rising after the trial period ends.
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The article Why Google's Partnership With Barnes & Noble Won't Scare Amazon originally appeared on Fool.com.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Barnes & Noble, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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