Walmart’s exit from Google Express brings up questions about the marketplace’s future

While Google is pitching itself as an alternative to Amazon, large brands that were early partners have pulled back, indicative of the marketplace’s lack of staying power. Early partners like American Eagle, Staples, Lucky, Office Depot, Blue Bottle Coffee, and REI are no longer selling on the platform.

In addition, last year, the company invested $550 million in Chinese e-commerce marketplace JD.com to feature its products on Google’s marketplace, but the initiative hasn’t yet launched. Google doesn’t also have the warehouses or logistics infrastructure that would allow it to play in Amazon’s court. In some ways, the offering is stuck being between somewhere between a marketplace like eBay and a larger scale hybrid retailer like Amazon.

“Having Walmart come off is probably very disappointing for them,” said Andy Taylor, associate director of research at Merkle. “Walmart’s exit might offer opportunities for [other brands], or it may give them more leeway to leave themselves.”

A Walmart spokeswoman said despite the pullback from Google Express, it’s still a “strategic partner” with Google, working with the company on voice shopping.

Google Express has been quietly growing its seller platform over the past year; there are currently 938 merchants on the platform according to Marketplace Pulse, including large big-box retailers like Target, Walgreens, Home Depot and Best Buy.

On Google Express, customers can browse products or branded stores like they would on eBay or Amazon. It first started as a subscription service, where Google would deliver products to consumers. It’s since morphed into a seller-led and fulfilled platform where brands do most of the heavy lifting. Brands that sell through Google Express also get opportunities to have Google shopping ads appear across Google’s platforms, including Google search, Google Images, YouTube and Google Assistant through a program called Google Shopping Actions. Google generates revenue through a cut of the sales.

In an emailed statement, a Google spokesperson said the company is focusing on ease of customer experience and plans to continue to add merchants to the platform. While it’s unclear what the longer-term impact of Walmart’s pullout will be, Google Express could have an opportunity to attract small sellers frustrated with Amazon.

“There are so many different things sellers are upset about with Amazon, so there’s an infinite number of avenues [Google] could go through,” said Juozas Kaziukėnas, founder of Marketplace Pulse. “If Google could give more [customer] data, it would be a different kind of platform.”

Google could also more prominently place products sold through Google Express in default search results. To succeed, however, Google Express needs to focus on the user experience and develop a compelling enough pitch to sellers.

“They’re attacking the problem from an Amazon and not a Google perspective — they need to think long and hard about how they can be more creative using this data,” said James Lanyon, vp of strategy and innovation at digital agency T3. “They could use wishlists, or use a threshold for automatic buy and ship.”

Google, with its access to a large repository of customer data, is uniquely positioned to dominate, but it should use that advantage to build a niche that sets itself apart from Amazon and other marketplaces, he added.

Target and Walgreens declined to comment on their plans for Google Express going forward.

“An important aspect of being on Google Express is the fear of missing out, primarily because competitors or on the platform,” said Taylor.

There’s also a branding issue that may be holding back some sellers from fully investing in it.

“Google Express is kind of confusing — it’s hard to find, and there’s a consumer awareness and understanding challenge,” said eMarketer retail and e-commerce analyst Andrew Lipsman. “[It] doesn’t occupy a place in the mind of the consumer; that’s an inherent challenge and that’s what may be behind Walmart’s motivation.