OAKLAND, California – Google tried to copy Amazon’s guidebook to become the shopping mall of the Internet, but with no success. Now it’s trying something else: an anti-Amazon strategy.
Google is trying to present itself as a cheaper and less restrictive option for independent sellers. And it focuses on driving traffic to merchant websites, not selling its own version of the product as Amazon does.
In the last year, Google eliminated merchant fees and allowed sellers to list their products for free in search results. They are also trying to make it easier for small, independent stores to upload their product inventory to appear in search results and buy ads on Google by partnering with Shopify, which provides stores. online to 1.7 million sellers selling directly to consumers.
But like many attempts by Google during the two decades of searching that competed with Amazon, this one has shown little effect. Juozas Kaziukenas, founder of Marketplace Pulse, said Google has nothing as exciting as $ 295 billion through Amazon’s third-party market in 2020. The number of goods people buy on Google is “very small. “- maybe about $ 1 billion. , a research firm.
Amazon is a fixed part of the lives of many Americans. It has overtaken Google as the starting point for shoppers and has become equally essential for marketers. Amazon’s global advertising business grew 30% to $ 17.6 billion by 2020, behind only Google and Facebook in the United States.
But as the pandemic forced many stores to go online, it created a new opportunity for Google to lure sellers who felt insecure about building their business on Amazon.
Christina Stang, 33, opened Fritzy’s Roller Skate Store near Pacific Beach in San Diego last March. Door-to-door orders forced her to set up an online store on Shopify.
She was lucky. She has a huge supply of skates as demand soars as videos of skating became popular on TikTok during the pandemic.
She linked her Shopify account to Google’s retail software and started buying so-called smart shopping ads. Operating within your allocated budget, Google algorithms choose where to place ads and which products to recommend. In 2020, she spent $ 1,800 on ads, viewed 3.6 million times and resulting in $ 247,000 in revenue, she said.
She did consider selling her products on Amazon’s marketplace, but she worries how much Amazon fees will mean for her already thin margins. She also likes the fact that Google redirects people to her carefully managed website instead of keeping them inside its own store, as Amazon does.
“I can sell on Amazon and not make money but have a larger online presence,” said Stang. “That doesn’t sound like a great idea.”
Recently, however, she experienced one of the drawbacks of being stuck between the partnership between Google and Shopify. Her store hasn’t been able to list any products since January because Google suspended her account. It says her shipping costs seem to be more expensive on Google than on the website provided by Shopify, though they are no different.
Shopify told her it was a Google problem. A Google customer service representative recommends that she hire a web designer. She continued to manage without Google, but it took away her positive experience.
“This completely cut off my knee,” she said. “I’m a small business and I don’t have hundreds or thousands of dollars to solve this problem.”
Sellers often complain about Amazon’s fees, which can account for a quarter of every sale, not to mention advertising costs and pressure to spend more to succeed. Amazon sellers do not have a direct relationship with their customers, limiting their ability to communicate with them and creating future business. And because everything is contained in the Amazon world, it’s hard to create a unique look and feel that embodies a brand’s identity in a way companies might on their own websites.
But since 2002, when it started a price comparison website called Froogle, a confusing play of the word “save” that required rebranding five years later, Google has struggled to draw a range. Cohesive look for your shopping experience.
They tried to challenge Amazon directly by testing their own same-day delivery service, but they shut down the project due to rising costs. It has been trying to forge partnerships with traditional retail giants, only to see alliances languish due to lack of sales. It has built its own marketplace to make it easier for shoppers to buy things they find on Google, but can’t break consumers’ habit of using Amazon.
Last year, Google put Bill Ready, the former CEO of PayPal, into the new senior position and spearheaded an overhaul of its shopping strategy.
Around the time of his hiring, Sundar Pichai, Google’s chief executive, warned senior executives that the new approach could mean a drop in advertising revenue in the short term, according to two people familiar with the chats who requested anonymity because they were not allowed to discuss them openly. He asked the support groups to promote e-commerce because it was a priority for the company.
As the pandemic fueled huge demand for online shopping, Google removed fees, allowed retailers to list products for free, and undermined its 2012 decision to only allow advertisers to display merchandise. on its shopping site.
Three months after hiring Mr. Ready, Google says the free listings will show up on their main search results. Then, Google said customers can buy products directly from sellers on Google without any commission. It also said Google will open its platform to third parties like Shopify and PayPal so sellers can continue to use their existing tools for inventory and order management and handling. pay.
The partnership with Shopify is especially meaningful because hundreds of thousands of small businesses have flocked to the software platform during the pandemic. According to research firm eMarketer, about 9% of US online shopping happens on storefronts provided by Shopify as of October, according to research firm eMarketer. This is up from 6% the previous year and is second only to Amazon’s market share of 37%.
Harley Finkelstein, president of Shopify, said Google and Shopify are developing new ways for sellers to sell through Google services, such as testing allowing customers to buy items directly on YouTube and show displays the products the store is selling on Google Maps.
Mr. Ready has had trouble when it comes to Amazon, a company that buys large ads on Google, but he made it clear that he believes Amazon’s dominance in e-commerce is a threat to merchants. other family.
“Nobody wants to live in a world with only one place to buy something and retailers don’t want to depend on gatekeepers,” he said in an interview.
Google says it saw an 80% increase in the number of sellers appearing in its results by 2020, with the most significant growth coming from SMEs. And retailers are currently listing more products.
Overstock.com, a seller of discounted furniture and home bedding, said it paid to list products on Google in the past. But now that the listing is free, Overstock is adding low-margin products as well.
“When every shopping activity starts and stops at Amazon, that’s bad for the industry,” said Jonathan E. Johnson, CEO of Overstock. “It’s nice to have another 800-pound tech gorilla in this space.”
What remains unclear is whether increasing the number of sellers and listing on Google will change online shopping habits.
BACtrack, a maker of breath generators, has more than doubled its ad spend on Amazon in the past two years because that’s where customers are, while they’ve spent 6% less on product ads. on Google.
“It seems more and more people are ignoring Google and going directly to Amazon,” said Keith Nothacker, chief executive of BACtrack.