Walmart Just Dealt Google's Online Shopping Push a Big Blow

Google has seen Amazon (NASDAQ:AMZN) eat away at its share of online product searches over the past few years, and that's bad for Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) business.

Google has been introducing new products and partnerships over the last few years to make it easier for online shoppers to find and purchase what they're looking for straight from Google. Walmart (NYSE:WMT) was one of its earliest partners for its Google Express and Google Shopping Actions service. But the big-box retailer recently pulled out of both products.

The move is telling of Walmart's ambitions and success in growing e-commerce, as well as how valuable (or not so valuable) Walmart sees Google as a partner.

Why is Walmart dropping Google?

Walmart removed itself from Google Express earlier this month, the first Google service for the retailer to drop. Google Express offers fast shipping from a selection of local stores; packages usually show up in one or two days.

Walmart is increasingly focused on fulfilling orders itself from its own stores. It's utilizing various delivery methods in order to get items to customers' doorsteps quickly. It's slowly expanding the number of items eligible for two-day shipping from its website as it looks to compete with Amazon Prime.

Google Express' fast shipping doesn't provide any additional benefits to Walmart's customers. Moreover, it dilutes Walmart's customer relationships. A shopper who uses Google Express to buy stuff from Walmart might not have the same attachment to Walmart as someone shopping directly with the retailer. On the flip side, Walmart can capture a lot more data on shoppers who use its website instead of Google Express and use that data to improve its online shopping experience over time.

Shopping Actions, the second service Walmart removed itself from, builds on Google Express. It makes a retailer's inventory easy to surface on Google's voice assistant, lets users check out using a "universal cart" that combines items from multiple retailers, and seamlessly integrates shopper loyalty programs into the checkout process. Ultimately, it's an advertising product where Google keeps a share of every sale. Again, Walmart likely pulled back to take greater control of its e-commerce operations.

That said, Walmart's decision also indicates that those benefits weren't moving the needle much for Walmart. Google's voice assistant competes against Amazon's Alexa. While smart speakers and voice assistants can be useful for researching products, very few people actually make purchases that way.

The move might also indicate that Google's efforts in e-commerce aren't paying off with a greater share of product searches. Losing Walmart's business certainly won't help in that regard.

Amazon keeps getting stronger

Google's coalition against Amazon has lost a key member in Walmart, and that's good news for Amazon. Amazon is gaining customer loyalty thanks to its growing two-sided network of Prime members and third-party merchants. There are now over 100 million Americans with access to Prime shipping benefits on over 100 million items on Amazon.com.

As more people start their product searches on Amazon, it encourages more merchants to sell their products on its marketplace and use its third-party merchants services. That, in turn, makes more products available for Prime shipping benefits, making Prime more attractive. And that results in more people starting their product searches on Amazon.

Google is a big loser of that virtuous cycle for Amazon, and it's largely dependent on other retailers like Walmart to help combat it.

Meanwhile, Walmart is working to attract customers to its own website, and it's had particular success with online grocery ordering. The company's shown considerable e-commerce sales growth thanks to grocery. Online sales grew 43% year over year in the third quarter, and grocery comparable sales on a two-year stack were the best in nine years. Walmart is working to translate more online grocery sales to general e-commerce sales.

For now, Amazon remains the one-stop shop for online shopping. Neither Google nor Walmart is going to take that away anytime soon.

This article originally appeared in the Motley Fool.

Adam Levy owns shares of Alphabet (C shares) and Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.