Can Google Inc (GOOG) Succeed in Retail?

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Get out the way
On the other hand, cutting out middlemen would definitely further Google’s goals. Even some carrier and hardware partners get in the way by trying to mark up Nexus devices.

T-Mobile is Google’s only official domestic carrier partner with the Nexus 4, and attempts to sell it at an unsubsidized retail price of $550. LG has jacked up the price of Google’s flagship smartphone to third-party retailers also. A Spanish retailer suspended sales after LG was suggesting a retail price of 599 euros — up to twice what Google Play was charging. An Austrian reseller has it listed for 549 euros, a 200 euro markup compared to Google Play.

Getting rid of margin-demanding third parties will allow Google to sell Nexus and Chrome devices closer to cost.

Seeing is believing
The notion of opening retail stores reportedly began as management was trying to figure out how to launch and commercialize Google Glass. The Explorer Edition of the device went on pre-order for developers at Google I/O last year for a whopping $1,500, and they should eventually retail to consumers at a price point between $500 to $1,500.

Google Glass is the type of revolutionary product that needs to be seen and experienced to fully appreciate. A Google Store is the most promising place where the company can convey this value proposition.

Google Stores face some challenges that investors must accept, but they might just pay off by helping accomplish some of Big G’s long-term goals.

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The article Can Google Succeed in Retail? originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, Google, and Microsoft.

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