Google and Shopify team up and go to war against Amazon.
Despite Amazon’s disappointing underperformance during year 2 of the COVID pandemic, the retail/media/technology behemoth raked in massive profits in their “other” business category: advertising. Amazon’s first (from April 2021) and second quarter (from July 2021) earnings reports state that advertising generated over $14 billion during the first half of the year; first quarter earnings were at over $6.9 billion while the second quarter saw an 87% increase at $7.9 billion. As a result, Amazon vowed to increase investment into their own advertising ventures; no doubt that a move such as this is intended to widen the gap between Amazon and their most direct competitors in Google, Shopify, and other major eCommerce service providers.
But Google isn’t ready to throw in the towel just yet. As Morgan Stanley reported in November 2021, Google managed to loosen Amazon’s death grip over the eCommerce industry. 57% of shoppers went to Google to search for products instead of defaulting to Amazon, new Amazon Prime subscriptions declined 3%, and Google searches by Amazon Prime members jumped from 51% to 56% from last period. This news, while not enough to signify any immediate danger in Amazon’s ranks, still comes as surprising since Google had consistently and continuously forfeited market share to Amazon throughout the past decade.
The latest turn of events in Google’s war against Amazon is last May’s announcement of a Google-Shopify partnership to help over 1.7 million small and medium businesses (SMBs) currently on the Shopify platform to expand their customer bases through Google services. Shopify merchants can now have their merchandise appear across Google’s 1 billion ‘shopping journeys’ such as Google Search, Google Maps, Google Images, Google Lens, and YouTube.
The Google-Shopify partnership aims to mutually combat Amazon’s ad spending attack. As stated in our previous article, Google Strikes Back, over 95% of firms and 60%-70% of employment are SMBs, and digital advertising revenue will come from them in large amounts. SMBs have already increased their eCommerce efforts and digital ad spending in order to survive during the COVID pandemic, which makes them excellent foot soldiers in Google and Shopify’s war against Amazon. Shopify also happens to be is the largest eCommerce service in America; adding the world’s most popular search engine among their pre-existing partnerships with Facebook (the world’s largest social media platform), TikTok (the world’s third largest social media platform), and Walmart (Amazon’s direct competition) could give all parties involved the support and reinforcement needed to successfully take the fight to Amazon.
Shop Pay on Google and Facebook
Shop Pay is Shopify’s own one-tap payment service provider (a la Google Pay, Apple Pay, PayPal, et al.). Customers are able to save their email addresses, credit cards, shipping addresses, and billing information so that checkout is quicker.
In order to check out online, customers need to provide their email addresses, shipping and billing information, and credit card information. This process is accelerated by Shop Pay, which helps small-business websites recall customer information. Instead of having to re-enter their information or verify themselves, customers can use their saved information for faster checkouts. Small businesses can use Shop Pay if they use third-party payment providers, and with last May’s partnership announcement, even merchants who don’t use Shopify but sell on Facebook and Google can now use this service.
“By extending Shop Pay to Google, we’re giving even more merchants—and consumers—access to industry-leading order tracking and carbon offset deliveries. And with a conversion rate that is 1.72x higher than a typical checkout, Shop Pay better equips independent merchants to convert the discovery potential of Google into sales.” (SOURCE: May 27th, 2021 Shopify press release)
Google Shopping Graph
In conjunction with the elimination of commission fees and granting merchants access to free listings on Google, the other major announcement from Google is the unveiling of their new Google Shopping Graph.
The Google Shopping Graph uses AI and real-time data to connect shoppers with a virtually unlimited selection of products from the multitude of eCommerce retailers on the Internet. Shoppers will be able to see the most relevant information when shopping for items in one place. Data is pulled from various sources such as shareable content, reviews, and product information directly sourced from the manufacturer/retailer to create a dynamically-adjusting model for shoppers to find the immediately available products they want.
“As we eliminate barriers like fees and improve our technology, we’ve seen a 70% increase in the size of our product catalog and an 80% increase in merchants on our platform. But exactly how do these sellers and their products show up across Google? Search, Shopping, Image Search and YouTube are popular ways for people to research and discover products. Today we announced even more ways to get discovered by people shopping every day.” (SOURCE: May 18th, 2021 Google I/O announcement)