Author(s): Peter Bryer
It's not thought of this way, but Amazon is a search and recommendation engine — a very successful one. Shoppers go to its site with their credit card and account details at the ready, search for a product and hit a Buy button.
Consumers intent on spending often bypass Google search and go directly to Amazon, so it's unsurprising that Google's response is to enable a greater level of e-commerce interaction. It's time to cut out some clicks and cut to the chase.
Google announced a new feature for YouTube advertisers that enables them to place product photos, descriptions and links next to video ads. It's about streamlining the path between buyer and seller. However, it still takes consumers from one site to another, and is a long way from the experience of the Amazon umbrella.
Sponsored links with product suggestions aren't revolutionary for Google, but represent a step toward becoming a sort of one-stop shop for purchasing goods and services. Google is in need of diversification, and presents billions of dollars' worth of opportunity.
The company says that early trials of Shop Now buttons connected to YouTube ads have made video advertisements three times more effective at driving revenue for retailers. It's a reflection of the efficacy of the ads. These aren't a change to Google's business model, but the company is expected to push Buy buttons deeper into the search experience, blurring the lines between retailer and search engine.
However, it could become increasingly difficult to distinguish between an Amazon-like experience and Web queries should Google integrate shopping directly into ordinary searches by embedding merchant features. The potential to disrupt the business models of middlemen is significant — with Google as a storefront, many retail brands could fade.
The company's largest challenge might be the Google brand itself, with antitrust concerns like the current investigation by the European Commission requiring Google to tread carefully. Its share of the value chain will have to be tempered, providing an opportunity for equal footing. Store brands won't be buried, and traditional retailers won't become fulfilment centres.
However, this is beginning of a new competitive age for the Internet. Almost every Web page could be a click away from a shopping cart. Google would be competing against e-commerce sites including Alibaba, Amazon and eBay at a time when major brick-and-mortar chains like Walmart must realign themselves as serious online players (see Daily Insight: Walmart's Prime Time). Google might highlight the win-win potential of its place in the e-commerce universe, enabling smaller retail rivals to remain relevant. There could be a level of democratisation here.
Google's Shopping service already provides retailers with the ability to place product details and links into ads, but the expectation that Google will assume a more central retail role would be a new angle for e-commerce.