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Will ‘Purchases on Google’ Threaten Amazon’s Dominance in Online Retail Landscape?

Jul 21, 2015 | Technology | Christina Johnsan

Google’s recent addition of a ‘buy’ button that allows internet users to directly buy a product via search results could well be a pivotal moment in the history of online retail. Officially known as ‘Purchases on Google’, the direct buy option can catapult Google into the league of some of the biggest names in online retail, such as Amazon and eBay.

Google’s foray into the online retail sector can pose significant challenges for the existing players. Google owns the online landscape, accounting for nearly 70% of all searches; its Android operating system has over one billion active monthly users. By incorporating a buy button, Google is aiming to provide users the option of purchasing products directly. As Omid Kordestani, Google’s chief business officer put it, the idea is to reduce “friction” for internet users so that they can shop quickly and conveniently.

Mobile searches have outpaced desktop searches in 10 countries, including the U.S. and Japan. Smartphones have become the preferred device for accessing social media sites and watching streaming videos. However, mobile commerce has not yielded the desired results for Google, with users often expressing their displeasure about having to zoom in repeatedly to read ad descriptions and filling in details on keyboards that are smaller than the average fingertip. Google has got the message loud and clear, and in a slew of measures, commencing with the “mobilegeddon” update in April, 2015, it is trying to upgrade its mobile experience.

Google’s addition of the buy button has been seen by many as the first step toward complete domination of the global e-commerce market. Although Google earns the bulk of its revenue from display advertising, and as such, it cannot pit itself directly against e-commerce sites, access to consumers’ credentials can help it retarget its ads in a more personalised manner. By improving the mobile ad conversion rates, Google will be in a position to charge more for mobile ads from e-commerce websites, something seen as a win-win situation by analysts.

Product searches is the most financially lucrative category for Google, and Amazon, with its “one-click” order system has been successful in pulling users from Google search into its in-app searches. Google’s executive chairman Eric Schmidt has, in the past, admitted that Amazon was Google’s “biggest search competitor.”

Google’s announcement of the buy button on mobile searches has evoked mixed response from retailers. While some have welcomed an alternative to Amazon, others are worried that retailers will be further pushed into obscurity. Google, on its part, has tried to quell the uncertainty by announcing greater exposure for retailers and recommendations about other products sold by them.

Summing up, it can be said that ‘Purchases on Google’ has the potential to disrupt the status quo in the online retail landscape. It will be interesting to see how Amazon and Co. react to this move by the world’s most visited website.