Info-tech

Google is missing out on Covid e-commerce revolution

Bloomberg | Updated on August 01, 2020 Published on August 01, 2020

The Covid-19 pandemic is fuelling an e-commerce boom as shuttered businesses move online -- but Google isn’t benefiting in the way its big tech rivals are.

Google advertising sales fell 8 per cent in the second quarter, causing overall revenue at parent Alphabet Inc. to shrink for the first time. The company’s main digital ad rival Facebook Inc. saw sales jump 11 per cent, while Amazon.com Inc revenue soared 40 per cent.

Those gaps highlighted how Google has struggled to parlay its online search dominance into a meaningful e-commerce business. Googles shares fell 3 per cent on Friday, while Amazon rose 4 per cent and Facebook jumped 8 per cent.

While Google runs the worlds largest search engine, United States (US) consumers are more likely to look for things to buy on Amazon. Facebooks’ Instagram has focused heavily on online shopping, and Facebook itself recent unveiled a big e-commerce initiative. Meanwhile, Googles ad business has been hurt by exposure to the travel industry and brick and mortar retailers, which have been devastated by the pandemic.

Google was asked about this disparity during a conference call late Thursday. We’ve gone through this pandemic where there is a real inflection point. We see it in Amazons results, Mark Mahaney, an analyst at RBC Capital Markets, said. I’m not sure I see it in Googles results.

The internet giant is aware of the problem. During Thursdays call, Chief Executive Officer (CEO) Sundar Pichai spoke repeatedly about the company’s e-commerce initiatives.

He highlighted more investment in a Buy on Google feature that lets people purchase products directly through search results without having to go to a retailers website.

The CEO also touted Smart Shopping campaigns, a type of ad that lets merchants upload their products, set a marketing budget and then leaves Googles artificial intelligence software to decide when and where to place ads around the web. The process is meant to make advertising easier for smaller sellers.

The company’s YouTube unit is also pushing more ads and features that let people buy directly from the video site.

Google is trying to make direct commerce a bigger part of its business in other ways, too. In recent months, it has opened up its Google Shopping marketplace to more merchants, dropped transaction fees and let any seller upload product listings for free. Before this, Google Shopping was mostly an advertising operation that required retailers to pay when consumers clicked on product ads.

Users come to Google a lot to find the products they are looking for, Pichai said on Thursday. Sometimes, the journeys may fail because they don’t find what they’re looking for, so we want to make sure its comprehensive.

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Published on August 01, 2020
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