OAKLAND, California — Google tried to copy Amazon’s playbook
to become the shopping hub of the internet, with little success. Now it is
trying something different: the anti-Amazon strategy.
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Google is trying to present itself as a cheaper and less
restrictive option for independent sellers. And it is focused on driving
traffic to sellers’ sites, not selling its own version of products as Amazon
does.
In the last year, Google eliminated fees for merchants and
allowed sellers to list their wares in its search results for free. It is also
trying to make it easier for small, independent shops to upload their inventory
of products to appear in search results and buy ads on Google by teaming up
with Shopify, which powers online stores for 1.7 million merchants who sell
directly to consumers.
But like Google’s many attempts during its two-decade quest
to compete with Amazon, this one shows little sign of working. Google has nothing
as alluring as the $295 billion that passed through Amazon’s third-party
marketplace in 2020. The amount of goods people buy on Google is “very small”
by comparison — probably around $1 billion, said Juozas Kaziukenas, founder of
Marketplace Pulse, a research company.
Amazon is a fixture in the lives of many Americans. It has
usurped Google as the starting point for shoppers and has become equally
essential for marketers. Amazon’s global advertising business grew 30 percent
to $17.6 billion in 2020, trailing only Google and Facebook in the United
States.
But as the pandemic has forced many stores to go online, it
has created a new opening for Google to woo sellers who feel uneasy about
building their businesses on Amazon.
Christina Stang, 33, opened Fritzy’s Roller Skate Shop near
Pacific Beach in San Diego last March. Shelter-in-place orders forced her to
set up an online storefront on Shopify.
She got lucky. She was sitting on a huge supply of skates
when demand surged as skating videos 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. Working within an allotted
budget, Google’s algorithms pick where to place ads and what products to
feature. In 2020, she spent $1,800 on the ads, which were viewed 3.6 million
times and led to $247,000 in sales, she said.
She considered selling her products on Amazon’s marketplace,
but she worried what Amazon’s fees would mean for her already-thin profit
margins. She also liked that Google redirected people to her carefully curated
website rather than keeping them inside its own store as Amazon does.
“I could sell on Amazon and not make any real money but have
a bigger online presence,” Stang said. “It didn’t seem like a great idea.”
Recently, however, she has experienced one of the drawbacks
of being stuck in the middle of the partnership between Google and Shopify. Her
shop has been unable to list any products since January because Google
suspended her account. It said her shipping costs appeared more expensive on
Google than on her Shopify-powered website, even though they were no different.
Shopify told her that it was a Google issue. Google’s
customer service representatives recommended that she hire a web designer. She
continues to manage without Google, but it has tainted her largely positive
experience.
“This has completely cut me off at the knees,” she said. “I’m
a small business, and I don’t have hundreds or thousands of dollars to resolve
this.”
Sellers often complain about Amazon’s fees — which can
account for one-quarter of every sale, not including the cost of advertising —
and the pressure to spend more to succeed. Merchants on Amazon do not have a
direct relationship with their customers, limiting their ability to communicate
with them and to generate future business. And because everything is contained
within the Amazon world, it is harder to create a unique look and feel that
express a brand’s identity the way companies can on their own websites.
But since 2002, when it started a price comparison site
called Froogle, a confusing play on the word “frugal” that required a
rebranding five years later, Google has struggled to chart a cohesive vision
for its shopping experience.
It tried to challenge Amazon directly by piloting its own
same-day delivery service, but it shuttered the project as costs ballooned. It
tried to forge partnerships with traditional retail giants, only to see the
alliances wilt from a lack of sales. It built its own marketplace to make it
easier for shoppers to buy the things they find on Google but was not able to
break consumers from their Amazon habit.
Last year, Google brought in Bill Ready, a former chief
operating officer at PayPal, to fill a new senior position and spearhead 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
short-term crimp in advertising revenue, according to two people familiar with
the conversations, who requested anonymity because they were not allowed to
discuss them publicly. He asked teams to support the e-commerce push because it
was a company priority.
When the pandemic spurred huge demand for online shopping,
Google eliminated fees, allowing retailers to list products for free and
walking back a 2012 decision to allow only advertisers to display goods on its
shopping site.
Three months after hiring Ready, Google said the free
listings would show up on its main search results. Then Google said customers
could buy products directly from merchants on Google with no commissions. It
also said Google would open its platform to third parties like Shopify and
PayPal so that sellers could continue to use their existing tools to manage
inventory and orders and processing payments.
The partnership with Shopify was especially meaningful
because hundreds of thousands of small businesses have flocked to the software
platform during the pandemic. About 9 percent of US online shopping sales took
place on storefronts powered by Shopify as of October, according to research
firm eMarketer. That was up from 6 percent the prior year and second only to
Amazon’s share of 37 percent.
Harley Finkelstein, Shopify’s president, said Google and
Shopify were developing new ways for merchants to sell through Google services,
such as experiments to allow customers to buy items directly on YouTube and to
display what products stores are carrying in Google Maps.
Ready walked a fine line when it came to Amazon, which is a
big buyer of ads on Google, but he made it clear he believed Amazon’s dominance
in e-commerce posed a threat to other merchants.
“Nobody wants to live in a world where there is only one
place to buy something, and retailers don’t want to be dependent on
gatekeepers,” he said in an interview.
Google said it had increased the number of sellers appearing
in its results by 80 percent in 2020, with the most significant growth coming
from small and midsize businesses. And existing retailers are listing more
products.
Overstock.com, a seller of discount furniture and home
bedding, said it had paid to list products on Google in the past. But now that
listings are free, Overstock is adding low-margin products, too.
“When all shopping starts and stops at Amazon, that’s bad
for the industry,” said Jonathan E. Johnson, Overstock’s chief executive. “It’s
nice to have another 800-pound tech gorilla in this space.”
What remains unclear is whether increasing the number of
merchants and listings on Google will ultimately change online shopping habits.
BACtrack, a maker of breathalyzers, has more than doubled
its advertising spending on Amazon in the last two years because that is where
the customers are, it said, while it has spent 6 percent less advertising its
products on Google.
“It seems like more and more people are skipping Google and
going straight to Amazon,” said Keith Nothacker, chief executive of BACtrack.
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