Google hopes to challenge Amazon Prime's free two-day shipping

Just as Amazon, who has strong e-tailer roots, delved into the tablet arena for the first time this year, Google is pulling the opposite by stepping out of its mobile comfort zone to give e-tailing a shot.

Google is reportedly creating a shipping service that will compete with Amazon. The Web search/mobile giant is already in talks with well-known retailers like OfficeMax, Gap Inc. and Macy's.

Google is specifically interested in going head-to-head with Amazon Prime, which is a $79 annual service offered by Amazon that allows customers to receive free two-day shipping and access to thousands of movies and TV shows as well as the new Kindle Owner's Lending Library.

Google relies on retail for 40 percent of its revenue, according to Reuters, and Amazon Prime has become more of a threat as its success heightens.

According to Scot Wingo, chief executive of e-commerce company ChannelAdvisor, a customer who signs up for Amazon Prime typically only shops with Amazon for the duration of their membership.

"Once a consumer joins Amazon Prime, their searches for products at Google have to decrease precipitously," said Wingo. "As a Prime user, I only look for products on Google and other channels if I can't find it on Amazon. Amazon has created a lock-in and they have the world's best product search engine. That's 40 percent of the Internet that Google really can't afford to lose serious share on."

Google already has a plan in mind. Its new Amazon rival will be much different from Amazon's set-up, though. Instead of having a website of its own, Google will simply integrate its brand-new shipping service into retail websites like

When a customer is browsing a specific retail website and chooses to check out, Google's new shipping service will determine if the physical store closest to the customer has the item. Then the customer can choose if they want it shipped to them within 1-2 days for a fee, which is aimed to rival Amazon Prime's two-day shipping.

Google plans to test the new shipping service in the San Francisco Bay area first before it is released nationwide.

Sources: The Wall Street Journal , Reuters

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