Google Just Upped Its E-Commerce Game To Attract More Sellers. Its Not Enough To Compete With Amazon

As the coronavirus has sent more shoppers online, Google, GOOGL -0.6% after several failed attempts in the past, is again trying to grow its share of the e-commerce market. The question is, will it work this time?

Google said Thursday that it will drop commission fees for merchants that participate in its Buy on Google program, which allows consumers to search for and check out products directly on its platform without being directed to retailers’ pages. Google also said it’s opening its platform to third-party providers, starting with PayPal and Shopify, to give retailers more choices. In recent months, the search-engine giant also made it free for retailers to list products on Google Shopping in the U.S., on top of bringing those free listings to Google Search.

These sweetened deals may help Google attract more sellers, but they’re not enough to give Amazon a meaningful run for its money in e-commerce.

Why? Try finding some products on Google Shopping, and filter them under Buy on Google—you’ll see for yourself. The process is confusing, far from the seamless experience that’s now a basic consumer expectation.

I randomly picked three items, each under $25, from three different sellers (including Target) that totaled $54. The shipping fee that each merchant would have charged at checkout amounted to an additional $19. (Google said on the website that the per-store free-shipping purchase minimum is $25 or $35 for most retailers.)

These three potential deliveries— a dress, a light resistance band and a two-pound dumbbell set—would have arrived separately on July 28, July 30 and August 13.

As the world’s top search engine, Google has clout, and its attempt to stop Amazon from growing its share of the ad market should not be overlooked. But Google’s latest e-commerce move so far has failed to show any real promise of posing a threat to Amazon.

Many studies show consumers begin their product search on Amazon for a good reason. The online retail giant has been able to hook them with an easy, one-basket shopping experience. Similarly priced items I found on Google Shopping could have easily qualified for free shipping via Amazon as the total transaction topped $25, its free-shipping minimum.

On top of that, Amazon AMZN +0.7% has hooked most of its Prime members with perks including Prime video and two-day—and increasingly one-day—shipping, as well as the ability to bundle shipments together for consumers who want to minimize packaging and delivery waste.

Amazon Prime had 112 million members in the U.S. as of December 31, representing about two-thirds of its shoppers, according to a report from Consumer Intelligence Research Partners in January. The company has a 34.5% share of the U.S. e-commerce market, up 1 percentage point from last year, Morgan Stanley analyst Brian Nowak estimated in a report last week. He forecast that Amazon’s share would rise to 37% by next year. 

Walmart, WMT -0.3% meanwhile, will beat eBay EBAY -0.1% to become the No. 2 online U.S. seller this year with a 5% share of the market, outpacing eBay’s 4%. Etsy, Wayfair W +2.2% and Chewy will have 1% each, the analyst projected. 

Google’s share, meanwhile, is almost nonexistent in any of these forecasts.

In terms of sellers, Amazon had 3 million active sellers in 2019, including more than 1.1 million in the U.S., according to a study by e-commerce analytics firm Marketplace Pulse. More than 85% of Amazon’s top sellers in the U.S. offered Prime shipping through its Fulfilled by Amazon logistics network for more than half of their assortment last year, up from 56% three years earlier, the study finds. 

Walmart, meanwhile, added 13,000 marketplace sellers last year, for a total of more than 35,000, according to Marketplace Pulse.

As for Google? It closed 2019 with more than 3,700 participating stores and sellers, including third-party merchants that also sell on Amazon and with major chains like Target and Best Buy, BBY +0.9%up from 825 in 2018, the study finds.

“While other major retailers are scrambling to offer one-day shipping, the new industry ‘standard’ set by Amazon, Google Shopping falls short,” the Marketplace Pulse report noted, adding that most products on Google show week-long delivery times. “Not only does Google have to figure out how to make ‘I bought it on Google’ a household phrase, but it also needs a strategy for fast shipping. … The convenience of next-day delivery is what brings shoppers to Amazon and Walmart.”

Delays caused by Covid-19 won’t be a good enough reason if Google wants to become a serious e-commerce player.


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