Google is looking for a large part of the e-commerce market by attracting sellers.
The tech giant announced this week that it is not charging sellers fees for listing products on Google Shopping. In recent months, Google has allowed products to be published on its purchasing platform and included those listings in search results at no charge; Now it also eliminates commissions when a customer buys a product through Google Shopping.
Alphabet (GOOGL) – Get report Shares closed 3% lower on Thursday at $ 1,516.75.
“These changes are about providing every business, from small stores to national chains and online markets, with the best place to connect with customers, regardless of where a purchase occurs,” wrote Bill Ready, Google’s president of commerce, in a blog post.
In addition to eliminating commissions, which generally vary from 5% to 15% depending on the product, Google is opening its platform to external providers of payments and inventory management, starting with PayPal. (PYPL) – Get report and Shopify (STORE) – Get report, in an attempt to attract more retailers to Google.
The changes amount to Google’s latest challenge to Amazon (AMZN) – Get report dominant position in electronic commerce.
Google has introduced several initiatives over the years to better compete with Amazon, such as a Prime-esque same-day shipping subscription, called Google Express, which was eventually dropped and renamed Google Shopping.
However, since COVID-19 started, many more customers are turning to e-commerce, and analysts believe that much of the sudden change to online shopping will end up being permanent. According to Adobe Analytics, US consumers spent $ 73.2 billion online in June, up 76.2% year-over-year, and are expected to continue shopping online at high levels for the foreseeable future.
“With each passing year, Amazon captures more and more product searches, one of the most monetized categories on Google,” said Raj De Datta, CEO of business experience company Bloomreach. “As more visitors start their journey on Amazon, fewer people start their shopping experience on Google. Google needed to change the game.”
Beyond the lack of listing fees, the changes Google announced this week offer brands free search exposure, potentially giving them access to much more retail demand. That can draw a greater variety of retailers to Google Shopping, and eventually shoppers as well.
Amazon shares have increased 57% to date amid growing demand for its e-commerce services. Alphabet shares have risen 10% to date.
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