Amazon’s real competitor is still in the making- and it is not Walmart or eBay or Shopify
When it comes to searching for anything on the internet you “Just Google it!!”- that’s the default home page for most browsers. The challenge is that very instant you add “Buy” to your search query — Google is no more the ‘Big Daddy” of search. That credit goes to Amazon with more customers searching directly on Amazon websites vs. Google. In fact, as per Civic Science for US market 49% of searches related to shopping happen on Amazon. While most would assume that this might be due to the ~100M Prime users, that’s not the case. Even if we look at non-Prime users, Amazon still accounts for 37% of the searches (same as Google). Interestingly, a Prime customer is less “price conscious” shopper and more likely to start his search on Amazon.
Clearly, when it comes to the more lucrative paid search, where advertisers/brands are ready to spend money on conversion — Amazon beats Google hands down. This means a potential big chunk of the Ad-Search Revenues are moving to Amazon- with little to offer from Google.
To A-Z or Not To A-Z:
Marketplaces like Amazon, eBay, Flipkart are a good place to start with when you are trying to reach customers online for the first time — at the lowest upfront cost possible- you can view them as a “SaaS for Online Shopping”. They charge you commission for your stores, listings, transactions and other services- typically ranging from 15–30% of the total product value. This does not account for shipping and returns costs which anyways is baked into the price by the brand/seller. Overall, this model works well, when you would want to reduce cost of customer acquisition in the initial stages of your brand journey OR you are a MSME seller focused on selling online.
The challenge starts when you grow beyond a certain size & volume on these marketplaces and you would want to target new customers outside of what is available on these platforms. Also, some brands would like to control the complete buyer experience and build their own customer base. A classic example was Nike which broke off a pilot engagement with Amazon citing “need to focus on elevating consumer experiences through more direct, personal relationships”.
All these brand initiatives are still not free and come at a cost- it requires “Digital Transformation” of the brand to combine omnichannel experiences while integrating customer journey across multiple channels (more detailed article here..). This is where Google Shopping comes in.
GOOGLE SHOPPING vs. GOOGLE ADS:
Traditionally Google has used AdWords (now “Google Ads”) and PLA’s (now “Google Shopping”) for search & display advertising to drive conversions for advertisers.
For Google Ads, you need to bid for specific keywords, in order to display your ads in the top fold preferably. This makes sense, when the volume of products is low or you are focused on a specific advertising campaign leading with Branding, Promotions & Sales Messaging efforts.
For Google Shopping, advertisers set their desired CPC in order to display their product listing ads at the top of Google search results. Advertisers can moderate their budgets at the product, product group, category and set daily limits. Most ecommerce platforms use this to showcase the “product” directly to consumers- as you don’t need to bid for keywords. For ecommerce platforms with millions of listings, the PDP (product display page) becomes the default landing page for all these clicks, effectively allowing you to create individual ads for each product. With increasing competition across platforms CPC’s have increased but, they still offer better conversions.
Over the last few quarters, Google Shopping has matured with a lot of product attributes/tags now available on the navigation bar and Google is already talking of Shopping being a big success in markets like India with 200+M listings and integration of 20,000+ My Business stores. Interestingly, most of the listings are still from marketplaces like Flipkart, Amazon, Myntra driving traffic back to these marketplaces, while checkout is still managed by these individual websites. Google is also talking of local language support for Hindi, Gujrati & Telugu using Google Translate.
In the US & France, Google has enabled “Buy on Google” option (you would see a cart option against that listing on Google Shopping). This allows you to directly checkout from Google Shopping using Google Pay, PayPal & Shopify. For the US, Google also announced that it would allow anyone to list products for free on its shopping site with “Buy on Google”. The free listings would also appear on its search results- which now removes the cost of listing and selling products for merchants. Also, Google allows you to seamlessly move your listings from Amazon to Google without making any changes to the data.
THE GOOGLE ECOSYSTEM:
Google assets are not limited to Google Shopping alone…
· Its got “text search” with no competition in this space with Google Ads. Similar to Amazon it has a huge quantity of consumers data to get them to click on the “BUY” button.
· Google Shopping has YouTube integration for Product Videos and Google Image search
· Google Home- Though Google is still second vs. Amazon Echo devices- shopping via smart devices is fast catching up. An eMarketer study suggests that 31M of American consumers, plan to shop online using smart speakers.
· Google Pay- when a lot of payment information is already shared by buyers. Google Wallet is already integrated with Chrome & Android. This makes it easier for Google to provide a seamless checkout experience via Google Shopping.
A-Z ALL THE WAY:
While Google has been making the right moves with Google Shopping, they still fall short of what market would expect- something that can impact Amazon!!. Amazon has 3M sellers globally and about 1.1M in the US. For Google there were 3700 sellers as of December 2019. There are nearly 112M Prime subscribers in US and Amazon share of online ecommerce is @ 34.5% expected to rise to 37% by next year, as per Morgan Stanley.
Clearly Google needs to “copy” some of the success on the basis of which Amazon was built:
- Increase the ecosystem on sellers on the platform. Customers should need an excuse to go to Amazon for buying new products.
- Build a glue like “Prime” to retain customers & a strong logistics engine.
- Build on Google Shopping as an advertising engine- but, that would require sellers to see the value of the platform vs. their own site or Amazon before they commit more $$.
Surely, there is a lot left to be done by Google for Shopping- till then customers will keep shopping from “ A to Z”!!
Pankaj Ukey
About the author: The author is an online marketplaces, retail and omni-channel consultant. He was the former Chief Operating Officer at Fawaz Alhokair Group, Saudi Arabia and helped build their Omni-channel Fashion Marketplace. He has 25+ years of experience across FMCG, IT/ITES, Ecommerce & Startups like Nestle, Microsoft, eBay & Flipkart. You can follow him on LinkedIn.
