On Monday, March 19, Google quietly announced its new program Shopping Actions. The program is partnering with some of the biggest retailers in the country in an effort to compete against Amazon.
From Search to Transaction
The core of the program is focused on Google controlling the customer experience all the way through the transaction. This allows the Google Home platform to directly compete with Alexa through voice search. While this all makes sense, what is most notable is that Google has for the first time shifted its revenue model from advertising (paying for the lead) to rev share (making a share of the transaction value). In my view this is a significant development. Historically, Google’s success has been all about providing a great user experience and getting the search user to the best outcome based on a given search. Google has never allowed itself to be compromised due to direct profit motivations. By being paid on the sale from select retailers, there is a much more significant opportunity for Google to direct traffic toward higher resulting outcomes. While this may be very good for the large retailers like Walmart and Target, it may significantly disadvantage other mid-size and specialty retailers who were historically winning on search.
A New Buying Experience
A lot is still unknown about the program, but Google is quoting AOV increases of 30% and items per order increases of 20% during the pilot portion of the program. That says to me that this is a positive customer experience and something that Google will continue to invest in. This will be an important program for B2C retailers to test and will perhaps help B2B players who have SKU-based product offerings to leap forward with their buying experience on new channels.
Redefining the Channel
In the end I am a huge fan of both Amazon and Google and believe that they are both pushing consumer shopping UX to the next level. I believe in the long run, this is going to force brands selling on Google to view it as more than an advertising channel and treat it like you treat Amazon today, as a defined go-to-market channel. Issues around customer control, data ownership and rules governing competition will continue to evolve and will therefore need dedicated experts who understand the channel.
The Slippery Slope
As part of the announcement, Google specifically called out that search engine rankings would not be affected. While that may be true, I don’t believe that addresses the real issue of mix shifting to the Shopping Actions program over traditional advertising lead generation. I for one hope that Google is smart enough to stick to their customer-first roots and not allow the slippery slope toward transaction ownership to muddy the waters.
Have questions about the implications of this announcement from Google? I'd love to discuss it with you. Drop me a line.