How Google is Evolving Its Marketplace to Compete (and support small businesses)
Google has announced several changes to Google Shopping and Buy with Google that makes it more affordable, time effective, and easy for merchants to list on Google Shopping. This represents Google making it more affordable for small and medium businesses to sell online, in an attempt to attract net-new sellers. Highlights of the announcement include:
- Google has dropped its commission fee for brands and merchants that use the Buy on Google checkout experience. This represents a 10%-15% reduction in fees.
- Google is opening its platform to third-party providers, such as PayPal and Shopify, to offer more choice to brands and merchants. This will simplify inventory and order management for many businesses
- Through Merchant Center, streamlined tools and services are being launched to support easy inventory and product feed management.
This is being rolled out to a pilot group of sellers currently and will be coming for all sellers in the next few months. This announcement comes on the tails of Google’s May and June changes to retailer costing on Google Shopping as well as partnerships. Google has called these efforts an attempt to “democratize access to digital commerce.”
What is Buy on Google?
Buy on Google is Google’s Marketplace offering that lives within Google Shopping. Buy with Google (formerly Shopping Actions) allows online shoppers to see and buy goods from retailers direct through Google sites. Historically, Google has charged merchants a fee of between 10-15% per item depending on vertical. Consumers simply need to look for the shopping cart logo on a product (shown below):
Other Key Announcements by Google in 2020:
- April 21st, 2020 – In a bid to help small and medium-sized businesses survive digitally through COVID, Google announced that they would no longer be charging merchants fees for listing and selling on Google. This also launched a partnership with Paypal that allowed merchants to link their Google Shopping and Paypal accounts.
- Importantly, they also changed Google Shopping search results to show, “primarily free listings”. This also meant that paid campaigns were able to be augmented with free listings too.
- Jun 29th, 2020 – Following their April announcement that Google Shopping tab in the US would primarily show free listings, Google followed this by bringing free listings to the main Google Search results page. This follows historically, these items having been sponsored only. This is not yet live as of end of July 2020.
Implications:
Google’s announcement is well-timed, as COVID-19 has generated a dramatic consumer shopping shift towards eCommerce.
Marketplaces are a lifeblood for eCommerce. In the first quarter of 2020, 52% of the units sold on Amazon were sold by third-party Sellers. This has become the fastest growing segment of eCommerce.
By reducing fees, Google is creating a strong incentive for those third-party Sellers to list on Google in addition to, if not instead of, Amazon. The increase in profitability will likely be a differentiator to many Small and Medium businesses. Google’s hope is that by attracting reliable inventory, they can attract new consumers to the platform. These moves now puts Google at the forefront as a cost-free option for merchants and the chance for Google to then win those consumers over from Amazon. This is an uphill battle which Google will continue to fight with Amazon.
For clients, we recommend a renewed interest in Buy on Google. Businesses of all sizes should be testing the waters and improving their presence to remain ahead of consumer shifts. Reprise can consult with brands to size the market, understand the margin shifts between Buy on Google and Amazon Marketplace, and to create warehousing and fulfilment options to enable deliveries within standard SLAs.
Key Stats:
- “Google is the world’s dominant search engine, but almost half of Americans start looking for things to buy on Amazon, while only 22% start on Google, according to a survey last year from research firm CivicScience.” (Bloomberg)
- “Google Shopping had about 3,700 stores and other merchants at the end of 2019, compared with 3 million active sellers on Amazon” (Bloomberg)
For any question please reach out to Will Margaritis, SVP Head of ECOMMERCE : [email protected]
