Google’s Buy Button Aimed at Capturing the E-Commerce Market

The recent announcement by Google Inc. to add a ‘buy’ button in its search engine results page (SERP) has got tongues wagging about what it means for Amazon. Google is the undisputed king of search, so much so, that ‘just Google it’ has become synonymous with making an online search. However, when it comes to buying products through the internet, users are more likely to tap into their app or sign in through their registered accounts. Or in case they do Google it, the most visited website in the world gets its display advertising cut for sending them to online retailers like Amazon or eBay.

A striking aspect of product purchases through e-commerce sites is the level of ignorance consumers have about the actual seller—one who owns the inventory. Although it does merchandise its own products, a majority of products sold through Amazon are just facilitation between the buyer and the seller. Google, which tracks online consumer behaviour very closely, can pretty much do that. Instead of sending users to Amazon, it can get the same retailers on board, and facilitate the transaction through its own platform. So, when Google’s chief business officer, Omid Kordestani said that the buy button will reduce “friction” in online purchases, there is a good chance he had Amazon on his mind!

Digital advertising is a major revenue source for Google, however, it is the more lucrative e-commerce market that seems to have prompted the incorporation of buy button. Compared to the US$ 60 Bn digital advertising market, the online retail market is expected to reach US$ 350 Bn by the end of this year. So, strategically, Google has made a smart move, but it needs to deliver exceptional customer experience to get more consumers shopping through its platform.

Google’s buy button can boost the company’s digital advertising bottom-line as well. In exchange of providing users seamless access while they make a purchase, Google will gain more information about their needs, behaviour, and shopping history. This information can then be used to retarget ads in a more personalised manner, which in turn, can lead to improved mobile ad conversion rates. An impressive conversion rate will mean higher advertising revenues, and it will be likes of Amazon and eBay who will have to shell more for getting prominent real estate on SERP.

Amazon has often been accused by retailers of obscuring their brands and preventing them from building relationships with repeat customers. The discontentment with Amazon is more so in case of small retailers. It is quite natural then that the announcement by Google has been met with mixed reviews, with small retailers fearing they will be further pushed in the wilderness. Google has tried to allay the fears by promising that product recommendation and opportunities for repeat sale will be provided to the retailers.

Another key reason for Google to add the buy button on its mobile searches is that mobile search is slowly and steadily overtaking desktop search. People are spending more time than ever on their smartphones, and with the proliferation of internet, they have the luxury of shopping even when they are on the go. Many third-party retailers still haven’t optimised their site for the web, and instead of losing out on a potential sale, Google is entrusting its own platform to provide superior mobile experience.

It will be interesting to see how Amazon reacts to Google’s announcement, but one thing that’s there for all to see is that e-commerce is gaining a very strong foothold, and that it can dominate the traditional retail in the near future.