Amazon may be increasingly encroaching on the turf of traditional retailers, but there is one surprising arena where it may be vulnerable: voice-controlled payments.

Target is partnering with Google to enable deliveries of Target goods over the Google Express delivery network, as well as voice ordering over Google Assistant on Android TV and Google Home, with smartphone support added soon. This follows a similar announcement in August that Walmart products would be available via Google Express, and a revamp last week of Google's line of voice-controlled in-home speakers.

These partnerships draw parallels with other alliances that have occurred in media, payments and banking where Google has become the platform of choice for coopetition. But there are tradeoffs with working with what is, above all else, an advertising platform — and retailers are unlikely to want to put all their eggs in one digital basket.

A doorway shaped like Google's Android mascot
Bloomberg News

Is there an Echo in here?

With Amazon’s purchase of Whole Foods, the e-commerce giant signaled loud and clear that it was targeting a category that many would have assumed off limits to an online retailer. The move also removed Amazon as a potential partner for any grocery store or food seller that wanted to tap into Amazon's Alexa assistant to get into consumers' homes.

There are still options such as Samsung's Family Hub refrigerators, but such devices are still expensive and unproven as a means of commerce. Google, with its Assistant built into Android phones and a new $49 entry-level smart speaker, is becoming the only viable option for retailers to partner with. Google is also making its new device available free of charge to people who preorder the new Pixel 2 and Pixel XL 2 smartphones to drive adoption. Amazon, meanwhile, has expanded its

For traditional retailers, Google is the lesser of two evils. And Google may still be building out its ecosystem, but its product line looks a lot more focused than Amazon's growing range of Echo devices (the smart speakers that are the primary interface for Alexa).

And yes, Apple has Siri, but with its HomePod speaker still MIA, Apple isn't a serious contender in this market just yet.

Google’s DNA is open platforms, and Apple's DNA is control

One of the fundamental differences between Apple and Google has been that Apple has worked to build a closed ecosystem designed to lock users into a world of Apple devices. Google’s Android OS has been more open, but also designed to fuel its core revenue stream — advertising. According to the Q1 2017 earnings release from Alphabet (Google's parent company), nearly 87% of its revenue came from advertising. As a result of this, many third parties have been wary of Google partnerships which, whether rightly or wrongly, are often seen as opportunities to mine data on consumers and their purchasing habits for the purpose of selling ever more targeted advertising. This is the reason that retailers are skeptical of Android Pay — the trade-off that comes from the partnership is that your customer data could be captured and reused.

All retailers face competition and one of the few unique "special sauce" ingredients they still own is information on their consumers — they will not risk this falling into the wrong hands.

Google Express is not without its limitations. A quick look over the grocery section of its website demonstrates a weak spot — all goods are canned or packaged, there is nothing fresh. Whether this is a restriction placed by retailers to keep their in-store offerings relevant, or whether this indicates the limitations of Google distribution network is unclear, but the core value proposition for groceries is delivery of fresh goods within a reasonable and specified time frame. For packaged items, consumers may just as well buy these online from Amazon or any other e-commerce retailer.

Should retailers go it alone?

If recent experiences in the digital wallet space are precursors of the what is to come in partnerships between retailers and digital platforms, we can expect cautious experimentation by retailers in partnerships, while maintaining and promoting their own digital delivery solutions.

While the “Pays” (Samsung, Android and Apple) boast thousands of participating banks, the larger institutions such as Chase and Wells Fargo have also brought their own flavor of digital wallets to market as a means of remaining relevant and controlling their brand in a digital domain. It is likely that retailers partnering with Google for delivery and voice ordering will have similar concerns — that their brand will be diminished to a carousel of logos, and shoppers will effectively shop by the items themselves, irrespective of which retailer is facilitating the order.

For this reason, it is likely that retailers will continue to experiment with their own delivery platforms such as Target Restock and Walmart Grocery — the open marriage of convenience with third parties such as Google will likely continue until traditional retailers have a clearer picture on what their digital future looks like.

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Nick Holland

Nick Holland

Nick Holland is a Senior Analyst at PaymentsSource. He has previously held analyst roles at Javelin Strategy & Research, Yankee Group and Aite Group.