Google Aims to Be the Anti-Amazon of E-Commerce. It Has a Long Way to Go.

OAKLAND, Calif. – Google has tried, with little success, copying Amazon’s Playbook to become the internet’s mall. Now it is trying something else: the anti-Amazon strategy.

Google is trying to present itself as a cheaper and less restrictive option for independent sellers. And it focuses on driving traffic to the sellers’ websites rather than selling their own version of products like Amazon does.

Last year, Google eliminated merchant fees and allowed sellers to list their goods in search results for free. Attempts are also being made to make it easier for small, independent stores to upload their product inventory to appear in search results and buy ads on Google by partnering with Shopify, which operates 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 work. Google doesn’t have anything as enticing as the $ 295 billion that flowed 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 staple in the lives of many Americans. It has usurped Google as a starting point for buyers and has become important for marketers alike. Amazon’s global advertising business grew 30 percent to $ 17.6 billion in 2020, followed by Google and Facebook in the US.

As the pandemic has forced many stores to go online, Google has created a new opening to advertise to sellers who are unsure about whether to build their stores on Amazon.

Christina Stang, 33, opened Fritzy’s roller-skating store near Pacific Beach, San Diego last March. Shelter-in-place orders forced them to set up an online storefront on Shopify.

She was lucky. She sat on a huge supply of skates as demand increased 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. Google’s algorithms work within an allocated budget and choose where to display ads and which products to offer. In 2020, she spent $ 1,800 on ads that were viewed 3.6 million times for $ 247,000 in revenue.

She considered selling her products on the Amazon marketplace, but worried about what Amazon’s fees would mean for her already low profit margins. She also loved that Google was redirecting people to their carefully curated website instead of keeping them in their own store like Amazon.

“I could sell on Amazon and not make real money, but have a bigger online presence,” said Ms. Stang. “It didn’t seem like a good idea.”

Recently, however, she has experienced one of the downsides of being in the middle of the Google and Shopify partnership. Your shop hasn’t been able to list products since January because Google suspended your account. Their shipping costs were said to be more expensive on Google than on their Shopify-powered website, although they were no different.

Shopify told her it was a Google issue. Google’s customer service reps recommended that she hire a web designer. She continues to make it without Google, but it has hurt her largely positive experience.

“That cut my knees off completely,” she said. “I’m a small business and I don’t have hundreds or thousands of dollars to solve this problem.”

Sellers often complain about Amazon’s fees, which can make up a quarter of any sale without the advertising costs and pressure to spend more to be successful. Merchants on Amazon have no direct relationship with their customers, which limits their ability to communicate with them and generate future business. And because everything is in the Amazon world, it’s more difficult to create a unique look and feel that expresses a brand’s identity in the way companies can on their own websites.

Since 2002 when a price comparison site called Froogle was launched, a confusing game of the word “frugal” that required a rebranding five years later, Google has struggled to develop a cohesive vision for its shopping experience.

It tried to challenge Amazon directly by piloting its own same-day delivery service, but the project closed when costs skyrocketed. Attempts have been made to partner with traditional retail giants only to see the alliances wither due to a lack of sales. It built its own marketplace to make it easier for shoppers to buy the things they find on Google, but couldn’t get consumers off their Amazon habit.

Last year, Google enlisted Bill Ready, a former chief operating officer at PayPal, to fill a new leadership position and drive a revision of its purchasing strategy.

Around the time of his hiring, Sundar Pichai, the executive director of Google, warned executives that the new approach could mean a short-term cut in advertising revenue, according to two people familiar with the conversations who asked for anonymity because they were not allowed to discuss them publicly . He asked the teams to support the e-commerce push as it was a priority for the company.

As the pandemic fueled huge demand for online purchases, Google eliminated fees so retailers could list products for free, and in 2012 it went back to a decision to only allow advertisers to display goods on their shopping page.

Three months after Mr. Ready was hired, Google said the free listings were showing up in top search results. Then Google said customers could buy products directly from merchants on Google with no commissions. Google will also open its platform to third parties like Shopify and PayPal so sellers can continue to use their existing tools to manage inventory and orders, as well as process payments.

The partnership with Shopify was particularly significant as hundreds of thousands of small businesses came to the software platform during the pandemic. According to research firm eMarketer, around 9 percent of online shopping sales in the United States in October were in stores operated by Shopify. That was a 6 percent increase last year and the second largest after Amazon’s 37 percent share.

Harley Finkelstein, president of Shopify, said Google and Shopify are developing new ways for merchants to sell through Google services, such as experiments that allow customers to buy items directly on YouTube and see which products are doing business on Google Maps.

Mr. Ready walked a fine line when it came to Amazon, which is a big buyer of ads on Google, but made it clear that he believed that Amazon’s dominance in e-commerce posed a threat to other retailers.

“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 that appear in its results by 80 percent in 2020, with the most significant growth coming from small and medium-sized businesses. And existing retailers are listing more products.

Overstock.com, a seller of discount furniture and home bedding, said it has paid in the past to list products on Google. But now that the listings are free, Overstock is also adding low-margin products.

“If all purchases start and end on Amazon, it’s bad for the industry,” said Jonathan E. Johnson, CEO of Overstock. “It’s nice to have another 800-pound tech gorilla in this room.”

It remains unclear whether an increase in the number of retailers and entries on Google will ultimately change online shopping habits.

BACtrack, a manufacturer of breathalyzers, has more than doubled its advertising spend on Amazon in the past two years because that is where customers are located, while 6 percent less was spent on advertising its products on Google.

“It seems like more and more people are skipping Google and going straight to Amazon,” said Keith Nothacker, CEO of BACtrack.

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