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Industry Trends

Analysis: Why Google’s New Marketplace is Amazon’s First Serious Competitor (Ever)

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Google is about to change the game when it comes to buying products online. And it’s going to be huge for retailers.

The search giant recently announced the launch of Shopping Actions. An attempt to radically improve the way people shop on Google – and help level the playing field against Amazon.

That sounds like a tall order. After all, Amazon alone accounted for 44% of all US ecommerce sales in 2017.

But that attitude changes when you consider that Shopping Actions will allow retailers to list products across Google Search, Google Express, the Google Assistant smartphone app and via a range of digital voice assistants.

All accessible to buyers via a universal shopping cart whether they’re on desktop, mobile or their digital voice assistant.

What exactly is ‘Shopping Actions’?

We all know about the insane amount of search queries Google handles every month.

Shopping Actions is Google’s attempt to turn more of these searches into direct purchases. And, crucially, for these purchases to take place inside their platform.

Currently, a trend for many shoppers is to start a search on Google before eventually completing their purchase on a third-party site – invariably Amazon.

See how if we search for “CRU Kafe Nespresso pods” in Google:

Google Search Cru Kafe

Then it becomes easy to get sucked into an Amazon listing via some of the top results:

Google Search Cru Kafe Results

But Shopping Actions is designed to keep shoppers inside Google.

Retailers submit a live inventory feed and their products will become visible to browsers with real-time availability and pricing via:

  • Instant checkout through Google Wallet.
  • A universal cart integrated across Google’s mobile, desktop and voice assistant platforms.
  • One-click reordering and personalised recommendations that increases basket size and encourages repeat business.

So using Google’s own example:

Someone can search for “moisturising hand soap”, see a sponsored listing for Up & Up brand soap from Target and add it to a Google Express cart:

Shopping actions example

Later on, that same person can discover they’re running low on aluminium foil and reorder it through voice on Google Home. With it being added to the same cart as the soap and purchasing all items at once through a Google-hosted checkout flow.

The order is then processed by the retailer as any other multichannel sale. And Google takes a commission-based cut, not an up-front ad payment.

What’s the big deal?

Yes, this effectively adds another huge marketplace to the mix for online retailers. (Or at least drastically improves what Google was already offering.)

And that’s great. But is it really that big of a deal?

In my view: Yes, it is.

This isn’t ‘just another update’ from a large marketplace. Something that gets the usual press hype before everything settles down again and Amazon resumes its usual place.

Google are jumping on a key aspect of improving online retail conversions: removing friction from the buying process.

The traffic is already there for Google (in spades). It’s just they traditionally then refer this traffic off to other websites to complete any relevant purchases.

So Shopping Actions isn’t another marketplace or feature hoping to pull users away from Amazon. It simply reduces the number of steps in what a lot of them are already doing.

And what’s more, all the huge brands (like Costco, Walmart and Target) are already using Shopping Actions in the US. Giving Google the combined inventory, warehousing and logistical power of some major retailers – and a huge edge on Amazon.

It’s the online equivalent of a grocery store opening up next door – meaning you no longer need to walk a mile down the street to the old one. Only, this new store sells the best products from every other grocery store too.

A different retail future

Early signs for Shopping Actions are pointing towards massive positivity.

Testing done by Google themselves suggests initial adopters in the US see:

  • An increase in total conversions and at a lower cost, compared to running Shopping ads alone.
  • Around a 30% average increase in basket size.
  • Customers continuing to spend more with that retailer in the four months after using Shopping Actions.

All this leads me to believe there really is an online retail world in the future that isn’t quite so Amazon-dominated as perhaps thought.

In the next 12-18 months, Google will continue to roll out and improve Shopping Actions outside the US. With entry into Europe and beyond surely only around the corner.

But the meteoric rise of direct selling on social channels like Instagram and Snapchat is also a factor. These offering in-app, frictionless purchasing in a similar style to what Google is moving towards:

Instagram shoppable posts examples

So a decline in the way people traditionally search Google (at least for physical products) is almost inevitable. But this will coincide with a leap in purchases made there as well as directly on social media.

And Amazon’s growth will stunt as a result.

How retailers can benefit

This isn’t just an opportunity for the big guns of Walmart, Target, Home Depot, et al. Any retailer can take advantage.

There’s the technical aspect of registering your interest and submitting live inventory feeds. (At Veeqo, we’ll be working hard towards building relevant integrations for Shopping Actions over the coming months.)

But making sure you don’t just get lost in a sea of other listings is another matter.

One of the major keys here is to think about it from Google’s perspective. And what do Google famously care about more than anything else?

The user experience.

Prime is a monumental thing in Amazon’s favour. It effectively being a loyalty club with stringent systems in place to consistently keep a promise of fast, free delivery and a fantastic customer experience.

So Google will no doubt prefer to rank retailers that can deliver (or at least rival) a Prime-like experience.

This means cheap (or free) and fast shipping, a super high order fulfilment rate as well as having reliable stock levels. And backing this up with a tonne of positive reviews too.

All in all, the frictionless user experience of Shopping Actions has a major role to play in the future of ecommerce.

And brings yet another critical sales channel for retailers to take advantage of as it’s rolled out in the coming months.

What are your thoughts on Google Shopping Actions? Do you see it as useful, or will it fall by the wayside compared to Amazon? Let us know in the comments below.

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Written by Matt Warren

CEO and Founder of Veeqo. We make software that helps ecommerce retailers manage and grow their online business.
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