February 22, 2018 • Volume 4
Reactions to Google Shopping Actions
Last week, Google rolled out a new program, called Google Shopping Actions, in an effort to slow Amazon’s conquest of e-commerce. Amazon’s market share is formidable enough, but the bee in Google’s Easter bonnet is the fact that the majority [56 percent according to this study] of online product related searching now starts on Amazon.
Shopping Actions is less of a program than a hodgepodge of offerings under the Shopping Actions brand umbrella, most of which have been around for a while.
- Consumers can search and buy products via Google Express, from a computer, mobile device, or Google Home voice-powered device
- Google Express allows consumers to save their payment and shipping information, which can be used for transactions at any participating retailer via Instant Checkout
- Google maintains a ‘universal shopping cart’ [which is actually a different cart for each merchant, all in one place]
- Shopping lists can be created, and added to, from linked mobile devices, computers, and Google Home devices
- Retailers can allow shoppers to link their loyalty cards, which allows targeted merchandising and loyalty card savings
- Retailers pay Google on a cost per sale, rather than on a cost per impression basis
Google is obviously ubiquitous on mobile and desktop computing devices, but Google Shopping and Google Express, less so. On the voice-powered front, Google is catching up with Amazon [Google devices accounted for nearly 40 percent of voice powered speakers sold online during holiday 2017]. In short, Google is in catch-up mode, but is making progress. Amazon has a significant edge on Google when it comes to linked devices. My Amazon username and password allow me to pretty easily tie together my desktop, mobile and Echo purchasing experiences, to the extent that’s needed. Generally, online purchases start and end in one purchase environment. This will change, though, as merchants train consumers to build baskets, not just make simple one-item purchases that lead to unprofitable orders. Amazon’s more significant advantage is that it has stored payment information for virtually all of its users because it is a retailer. Google, because of its ad supported business model, makes its money from advertisers, not consumers, and has few stored payment credentials. Despite the challenges, Google is well-positioned to become a threat to Amazon:
- Through partnerships with retailers, Google can bring more big merchants into a single shopping trip
- Google has the ability to allow consumers to tap into local store inventory, rather than inventory located in remote distribution centers. Retailers are finally starting to take the task of maintaining accurately updated local store inventory seriously, as evidenced by initiatives at multiple retailers (like Walmart and Target) to use robots and drones to keep track of what’s in-stock.
- Amazon’s dominance in e-commerce has made it abundantly clear to both retailers and brands that they have a common Boogeyman. While collusion between retailers is illegal, companies like Google are well-positioned to focus the collective efforts of retailers and brands on a counterweight, in a legal way. If the Echo had come out 10 years ago, Walmart would have undoubtedly built its own competing device. But with Amazon 10 times bigger than its nearest competitor, it is obvious to Walmart that it is far better served by abdicating that to Google.
My advice to Google, retailers competing with Amazon, and brands
- Your first shopping priority over the next few years should be to collect stored payment and shipping addresses for as many shoppers as possible. Think about how other Google assets: YouTube, Nest, Drop Cam, Android, Waze, and new acquisitions might allow Google to expand its transactional relationships with consumers. We know that you get this, as evidenced by this move recently, incenting usage of Google Pay.
- What we’ve seen thus far from Google Shopping Actions seems like more of a retailer-centric offering than a consumer centric one. Change that – convince consumers that Google matters to them when it comes time to shop, online or off.
- Continue to press retailers to make local store inventory available on Google search, and expand in-store pickup to Google Shopping Actions.
- Most significantly [and most difficult] – think about all of this as part of a shift from a fully ad-supported business to a hybrid ad/commerce model. Increased privacy regulation is-a-coming, even if it’s not your fault [ahem, Facebook]. Putting yourself in the center of the e-commerce game is going to be critical to mitigation of the revenue losses that will come as data collection and monetization become more constrained.
- Don’t try to compete with Amazon on device development. You will only waste money and distract your focus.
- Invest to develop a high level of accuracy with your in-store inventory availability, share that inventory with Google, and pressure Google to add in-store pickup options to Google Express.
- Develop programs in partnership with brands to capitalize on consumers searching on Google. If a consumer searches for ‘diapers’ on Google, Target ought to have a program where Kimberly Clark and Target share the cost of advertising Huggies via Target.com on Google. Programs like this are somewhere between invisible and nonexistent. Maybe there is an opportunity for Google to get in the middle of this, given brands’ skepticism that retailers are always spending trade dollars as they should.
- Carve out online shopper marketing dollars for retailers other than Amazon, as described above.
- IF you sell products that justify their own profitable deliveries, you ought to be thinking about your strategy here. I continue to argue that brands going direct-to-consumer has to happen in those categories, despite the inevitable channel conflict. If Walmart is going to sell its own brand of private label diapers you need to go straight to the consumer in a convincing fashion [with competitive shipping options, competitive pricing, and a marketing budget]. Amazon, with its disregard for product profitability, has risen to the top of the ‘things to keep you up at night’ list for both brands and retailers.
The task ahead of Google and big retailers is no small undertaking. It requires a level of cooperation between big brick and mortar retailers, and Google [companies big enough that they are more accustomed to strong-arming their partners than sharing and cooperating] that is probably terrifying. I get that. The alternative, though, is the feudal online retail landscape that exists today, overseen by a lord that hordes market share, rather than treasure, at all costs.
Ken Cassar is vice president, principal analyst at Slice Intelligence, where he looks at trends in the e-commerce industry armed with Slice’s robust set of online sales data.
Ken brings a rich online retail background to Slice Intelligence. Most recently, Ken was SVP, Media Analytic Solutions at Nielsen, where he developed several innovative digital commerce measurement and advertising effectiveness solutions. Prior to Nielsen, Ken was an analyst at Jupiter Research, where he was an early thought leader, trusted adviser, and media source on e-commerce. His prescient outlook on fledgling e-commerce industry was a key contributor to Jupiter’s dominance as a digital media zeitgeist at the dawn of the Internet.
Ken has an MBA and Bachelors Degree in Political Science from the University of Connecticut. Ken aspires to stay technologically ahead of his teenage children, as evidenced by his ‘Gadget Geek’ Slice profile. He also has the appropriate jacket for every occasion.