Google and Shopify Expand Partnership to “Democratize” Ecommerce
Google introduced new features and an expanded partnership with Shopify aimed at grabbing a bigger piece of a booming e-commerce business in the face of Amazon’s increasing success at winning a greater share of the market for searches by online shoppers.
Bill Ready, Google’s President of Commerce and Payments, announced the expanded partnership at the company’s I/O developer’s conference Tuesday as part of a plan to “democratize” online shopping. Shopify shares rose more than 3% after the announcement. Google slipped about 1%.
“When it comes to shopping, what we’re really trying to build out and support is a free and open commerce ecosystem, “ Ready tells Forbes. “This is really important for consumers to have choice, and especially for small and mid-sized businesses to be able to participate in the rise of digital commerce as well.”
At the heart of Ready’s strategy is the reintroduction of free listings—which he introduced in April 2020—onto the Google Shopping platform, and an expanded partnership with Shopify and its network of 1.7 million retailers. Users are already engaging with Google’s shopping features more than one billion times per day, he says, which represents an untapped universe for the search giant— Google remains a minor player in a business that rose to $861.12 billion in the U.S. last year, according to Digital Commerce 360.
Ready describes Google Shopping as a platform rather than a retailer or marketplace. It is designed to help people “discover, learn about and shop for the products they love—whether those products come from a big-box retailer, new direct-to-consumer brands or the mom-and-pop shop down the street,” he wrote in a blog post sent to Forbes before the I/O announcement.
Formerly COO at PayPal and CEO of Venmo and Braintree—which PayPal acquired in 2013— Ready began shifting the company’s strategy within months of joining Google in January 2020, just as the pandemic was set to trigger a digital shopping explosion that McKinsey says created a 10-year leap forward in e-commerce adoption over the period of three months. That included the move to shift Google Shopping away from its “pay-to-play” ad model by opening free Shopping listings to all merchants as online retailers.
“The primary place where Google and Amazon are different is when it comes to advertising. Google has literally been doing this for 20 years now. It’s a significantly more advanced product…but Amazon is very quickly catching up,” said Brian Roizen, cofounder and chief architect at Feedonomics, a platform that helps large brands and retailers (including Amazon, Walmart, and Target) manage and optimize their product listings.
Amazon does not disclose its advertising sales specifically, but its Q4 earnings report included a nearly $7 billion “other” category, part of which is advertising revenue.
Google won’t see any revenue from the free ads and instead hopes that massive collection of users will attract merchants, who in turn will attract more users to the service. While it is not an online retailer in the traditional sense—it does not have or control inventory—Google Shopping mimics one with categorized listings, promoted suggestions based on past behavior, shopping cart and “Buy on Google” feature.
All of this is likely designed to leverage Google Ads, which brought in $147 billion for Alphabet last year, more than half of all online ad spending in the U.S. That dominance is being hacked at by Amazon, which grew its share of the spend to 19% last year, up from 13.3% in 2019. Today, more than half of online shoppers start their searches on Amazon, making it a prime place for advertisers to connect with potential customers.
Ready can thwart that incursion by stressing to merchants the power of Google data and the tools that data may eventually help create. Google will be introducing a “Shopping Graph,” an AI-generated model that “understands products, sellers, brands, reviews…[and] how those attributes relate to one another,” Ready wrote.
The feature is modeled after Google’s “Knowledge Graph”—which appears to users as an infobox when they search for things like a celebrity’s name—but will be hidden from merchants and other users on the front-end, with updates and insights delivered as Google-developed tools meant to help optimize their listings.
“It’s really our modeling and our data set around these things,” Ready said. “And then we bring it back to them through specific product features.”