Alphabet Inc.’s Google on Monday launched a new program that positions its platform as a tool retailers can leverage to challenge the dominant position that Amazon.com Inc. holds within the U.S. e-commerce market; Amazon accounts or about $4 in every $10 spent online in the United States.
The program, called Shopping Actions, enables retailers to list their products in sponsored listings adjacent to regular search results, in its Google Express shopping service and in its Google Assistant app that’s available within smart speakers such as Google Home and on smartphones. In exchange for the listings, merchants using the program pay Google a percentage of each purchase, which is a shift from its existing cost-per-click and cost-per-thousand impressions advertising models.
Google says it is working with retailers such as Target Corp., N0. 20 in the Internet Retailer 2017 Top 1000, Ulta Beauty, No. 119, and 1-800-Flowers.com Inc., No. 59.
The program offers shoppers a universal shopping cart that cuts across devices. That means a consumer can search on Google for moisturizing hand soap, see a listing for up & up brand soap from Target and add it to a Google Express cart. Later, in the kitchen, he can reorder aluminum foil through voice, add it to the same cart using Google Home and purchase both items through a Google-hosted checkout flow on his smartphone while watching TV.
By offering features such as one-click reordering, personalized recommendations and basket-building, Google also aims to help retailers turn one-time buyers into repeat customers. For example, Google can show an Ulta customer who integrates her Ulta Ultamate Rewards loyalty program with Google other products based on her past order history when she searches for a particular item. And, if Google knows she purchases makeup remover on a monthly basis, it can surface the same brand of makeup remover to her when she is most likely to reorder it.
The Shopping Actions program seeks to leverage the large number of consumers searching on Google with product-related questions and assistance. For instance, Google mobile searches for “where to buy” grew more than 85% over the past two years, according to 2017 Google data. And 55.5% of consumers who own a smart speaker use their device to search for a product with their voice (and 44.2% use their device to make a purchase), according to an Internet Retailer-exclusive survey of 274 online shoppers conducted by Toluna in December 2017.
“Today’s consumers don’t just want answers; more and more, they’re craving relevant, meaningful and immediate assistance in completing their day-to-day shopping tasks,” writes helpful, personal and frictionless interactions that allow them to shop wherever and however they want—from making decisions on what to buy, to building baskets, to checking out more quickly than ever before. Put simply, they want an easier way to get their shopping tasks done.”
Google says that retailers that have tested Shopping Actions have, on average, generated an increase in total conversions at a lower cost, compared to running Shopping ads alone. They also have produced an approximately 30% average increase in basket size. For instance, over the last six months, Target has seen the size of guests’ Google Express baskets increase by nearly 20%.
“Our guests love the ease and convenience of making their Target run without lifting a finger by using voice interface,” says Mike McNamara, Target’s chief information and digital officer, in the blog post. “And since the orders are shipped from a nearby Target store, they’ll have their items delivered to their home in just two days.”
Target plans to enable shoppers to link their Target.com and Google accounts in the near future, which it believes will create a “more personalized and intuitive shopping experience,” he says. Later this year, Target will enable customers to use Target’s REDcard when shopping through Google, which offers 5% off Target purchases and free shipping.
Shopping Actions is Google’s attempt to give retailers what they want: sales, not just branding, says Rebecca Lieb, an analyst and founding partner at Kaleido Insights. “Google Shopping is a step forward in delivering that, as well as making shopping more enticing and frictionless for users.”
Omar Akhtar, an analyst at the consultancy Altimeter Group, agrees, noting that Shopping Actions is Google’s attempt to offer shoppers a simple shopping experience that’s in line with the experience offered by Amazon.
“Google wants to use the large ecosystem it already has to give shoppers an experience that’s as good as the one that Amazon delivers,” he says. ‘”It hasn’t offered that before, but if it can produce that, it can offer retailers an alternative to working with Amazon.”
Like Amazon, which has a rapidly growing advertising business that enables brands to pay to drive consumers to their products, Google is seeking another way to monetize the large number of consumers searching on its platform, he says. However, that could come at a cost to the Google brand, which is built around delivering the best results.
“Google has to be careful,” Akhtar says. “Google is supposed to deliver the best results, but if it is giving more visibility to brands that pay more money, it could hurt its brand equity. But, at the same time, it’s operating in the real world where those that can afford bigger billboards or bigger banners get more attention and traffic.”
Already, Google faces the challenge that a large share of consumers don’t turn to Google when they’re searching for a product. 52.5% of online shoppers start their product searches on Amazon, according to a December 2016 Internet Retailer survey of 515 U.S. adult online shoppers. Moreover, the majority of online shoppers, 72%, visit Amazon to help find product ideas and information before they make a purchase, according to an August survey of 3,100 consumers in the United States, Germany, United Kingdom and France on behalf of digital marketing vendor Kenshoo Ltd. And 22% of consumers won’t look at another site if they find a product that looks suitable on Amazon.
Shopping Actions also represents the first significant attempt to monetize voice search. The results from its efforts could offer a template for how retailers leverage voice search in the future.