Survival of the Biggest: Ecommerce in the Era of Amazon & Google Shopping Actions

Google Shopping Actions continues the epic battle between Amazon and Google for consumer mind and wallet-share.

According to a Bloomberg study, 55% percent of customer product searches originate on Amazon, up from 44% percent a year earlier, literally giving Google a run for its money. And in this ceaseless Amazon-Alphabet battle of disruptions and countermoves, the new Shopping Actions program makes it clear that Google won’t give up customer search market share without a fight.

In efforts to recover customer search preference, Google officially announced their new Shopping Actions program, now available to U.S. retailers. The program aims to streamline purchase through Google Assistant and Google Express shopping ads in search results, allowing customers find products via mobile, desktop, and voice-controlled devices. Customers view a Google-hosted product listing page, add items to a universal shopping cart, and have instant ordering through a Google-hosted checkout flow. All of which is strikingly similar to the Amazon Marketplace, which hosts the entire customer journey from search to purchase.

Google claims Shopping Actions is a response to a staggering 85% increase in mobile searches for ‘where to buy’ over the past two years, with 44% of voice-activated assistant owners ordering groceries and other household items on a weekly basis. Rather than these inquiries and orders pointing users to Amazon, Shopping Actions allows Google to intercept the purchase and route it back to major retailers, but not without a cost – Google takes a cut of every transaction with a pay-per-sale revenue model.

Google Shopping Actions

Google Express / Shopping Actions interfaces on voice assistant & mobile. Source: Google

While there’s evident demand for increasing convenience in online shopping, and an industry need to restore purchases back through retailers, these overly-centralized shopping experiences could have major implications for the future of ecommerce.

With the current pay-per-sale model, any retailer can apply to register their products on Shopping Actions and pay only when a transaction occurs. The handful of early adopters, including Target, Walmart, Ulta Beauty, and CostCo have seen basket sizes increase by over 20%, average order value (AOV) increase up to 35%, and a higher-than-average conversion rate when compared to sponsored advertisements alone. However, these lighthouse customers are testing in a Shopping Actions space without much competition. As Google shifts advertising network revenues, which account for 90% of Google’s total revenue, to an increasingly saturated Google Shopping Actions market, we could potentially see future program cost structures adopt AdWords bidding models. Think targeted strategies for shopping page location, ranking preference, and enhanced cost-per-click (enhanced cut-per-transaction), while still maintaining the baseline pay-per-sale.

With bigger competition driving higher bid costs, deeper pockets, with broader product selections, could have an unfair advantage over middle-market retailers.

Additionally, customers can link rewards programs, merchant-branded credit cards, and use voice-enabled shopping enhanced by previous order history on their Shopping Actions accounts. For example, if a customer consistently buys household goods, earning 5% back with their Target RedCard as preferred payment, Shopping Actions will promote previous order history for one-step checkout, provide personalized recommendations, and prioritize Target in Google Express results based on customer preference. Affinity customers, who will now have even more reason to keep Target top-of-mind, simply say, “add paper towels from Target to my shopping cart”, or click Target as the first search result, without interaction with alternative retailers.

This takes essential brand interactions, from perusing the organic SERP to find new retailers, to looking out for brand communications to stay up-to-date with promotions, and even to retailer-curated cross-sells, entirely out of the customer journey. When retailers’ product listing and description pages are removed from the context of the ecommerce site, and further so, the context of the brand, retailers will sacrifice critical touchpoints to building meaningful customer relationships, facilitate cross-and-upsells, and drive additional brand engagement.

When we don’t see purchases motivated by linked rewards accounts, customer affinity, or merchant-branded credit cards, we’ll likely see purchase decisions driven by price – and in turn, price driven by increased competition.

Customers originate product searches on Amazon Marketplace with confidence they’ll find the right products at consistently competitive prices. And with Google Shopping Actions adopting a similar marketplace model, there’s speculation of competition-driven price wars. For comparable retailers, Shopping Actions pulls product listings across registered retailers in aggregate, causing customers to make price-driven decisions, in addition to serving price-driven results priorities with “Price Low to High” product sorts or voice commands like, “Where can I buy the cheapest Tide laundry detergent?”.

We’ve already seen Walmart and Target vow to invest billions over the next few years to bring customers even lower prices in response to Amazon Marketplace, and Google Shopping Actions provides another venue to foster big-box competition and fend off sales lost to Amazon.

Google shopping price filters

Prominent price filters on Google Shopping search landing pages. Source: Google search results

And with one-click ordering from the universal cart, in which customers can add products from any range of retailers without order minimums, vying retailers will also need the logistics capacity to handle increased, varied-size order volumes.

Once customers checkout on Shopping Actions, the order is passed directly to the retailer for fulfillment. Amazon’s sophisticated logistics capabilities and 2-day Prime delivery, coupled with an ever-increasing demand for faster shipping, pose a threat to mid-sized retailers without high-velocity shipping capacity. Google Express results pages have clear shipping threshold callouts, but affiliates with the logistics capabilities and on-hand inventory who can offer fast, free delivery will likely have an advantage. Although Google is late to the logistics game, we’ve recently seen Google invest over $1 billion in self-driving technology through Waymo, and Alphabet Inc. invest in several transportation-focused robotics companies. While Google may eventually assist retailers in Shopping Actions supply chain struggles, it may not be before the big guys get a jump on customer purchase preference.

With that said, Google Shopping Actions gives retailers another chance to surface products to new and repeat customers.

Between Amazon launching generic brands like AmazonBasics to compete alongside CPG manufacturers’ products, and pushing prime-eligible and Fulfilled by Amazon (FbA) products in search results, to Amazon’s margin-crushing pricing rules and withholding purchase and customer data from sellers – Shopping Actions is a huge counter-move to prevent Amazon from pushing out retailers across categories.

Google has a massive global reach. In fact, Google has sold a voice-assistant device every second since October 2017. If Google Express can operate like an organic search results page, rather than being cluttered with high-bidding sponsors and favored affiliates, Shopping Actions can help retailers increase scale with listings across devices, streamline Point of Sale (PoS) conversions with 1-click checkout, and add customer touchpoints in new contexts, like the AndroidAuto voice assistant.

As Shopping Actions evolves, we’ll get more information about how the program will really impact the ecommerce landscape, and how brands and retailers can best adapt. In the meantime, we’ve compiled some strategies retailers can take to prepare:

  • The Shopping Actions transaction tracking and management will likely still be in Google Merchant Center, so retailers running Google Shopping campaigns should be sure to organize roles, campaigns, and account access to enable scaling as the program grows.
  • Google Express prominently displays product ratings on the listing page card. Reviews are a low cost, effective strategy to create unique user-generated content that factors into organic search rankings, and can help differentiate products in an aggregated marketplace. Google pulls ratings from multiple sources, so if you don’t already have a third-party aggregator or in-house functionality, we recommend implementing one.
  • Google Express

    Google Express: product listing and landing pages. Source: Google Express results

    Source: Google Express results

  • With more than 3 billion rewards program memberships in the U.S., it’s no secret that rewards programs can help drive repeat purchases and gain customer loyalty. Shopping Actions allows customers to link rewards program accounts, and when combined with simplified purchase and repurchase (more impulse, micro-moment purchases), retailers have an opportunity to drive volume and affinity. Rewards programs can also help bring Google Express & Shopping Actions data back in-house.
  • When it comes to positioning your products and gaining visibility, it’s time to get personal. In a sea of generic messaging and similar products, retailers have a lot to gain from marketing campaigns and content that target customers with intent at the right place, on the right platform, and at the right time.

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