Why Amazon.com, Inc. (AMZN) Should FEAR Google Shopping (GOOG, GOOGL)

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One might think that Amazon.com, Inc. (AMZN), as the undisputed leader in online retail, should be able to kick back and rest on its laurels this holiday season.

Why Amazon.com, Inc. (AMZN) Should FEAR Google Shopping (GOOG, GOOGL)One would be sorely mistaken.

It isn’t traditional retailers like Walmart (WMT) or Target (TGT) that should have AMZN shaking in its boots once Black Friday rolls along — it’s Alphabet Inc (GOOG, GOOGL), specifically its newly improved Google Shopping experience.

The bad news for AMZN stock holders? It may be too late for Amazon to even do anything about it.

GOOG: A Mobile Powerhouse

It’s no secret that Internet users are increasingly taking to their tablets and devices for more and more of their online activity. That means that more and more e-commerce is happening via mobile as well, and that means AMZN has an inherent interest in protecting its virtual domain.

GOOG, on the other hand, is the proverbial barbarian at the gate.

The search giant recently estimated that about 30% of online purchases happen on mobile phones, which is why its recent revamp of Google Shopping, its own e-commerce platform, aims to optimize and simplify the mobile experience.

The Google Shopping redesign aims at streamlining the search and purchase process, and now narrows down broader queries (which account for 40% of online shopping searches) and returns specific results, providing further specs such as the product price and brand. GOOG also lets the user easily scroll through product reviews and swipe through different results, so that when they finally click on a product they’ll be more likely to buy it.

Advertisers obviously love all of this, and are willing to pay a higher price per click to have their products featured.

That’s GOOG’s end goal in all this, of course — to haul in ungodly sums of ad revenue from merchants paying to have their products featured prominently on Google Shopping. If the new updates are compelling enough, AMZN could suffer a material hit.

That’s because, over the years, AMZN has become more and more ubiquitous, and more and more web browsing denizens are going straight to Amazon to start their product research. That costs Google, and other search engines like Yahoo (YHOO) and Microsoft’s (MSFT) Bing, a large number of valuable, qualified traffic.

An October survey by BloomReach found that an incredible 44% of consumers start their product research on Amazon.com, skipping search engines entirely. Just 34% begin on search engines, the study found. That’s a hefty gain in market share for AMZN, as just three years ago the percentage of consumers who searched Amazon.com first stood at 30%.

The new update to Google Shopping also uses location services to tell consumers if the product they’re looking for is available nearby. And with the recent rollout of next day delivery in a number of large markets like L.A. and San Diego in Southern California, the e-commerce war with AMZN is heating up.

And with the U.S. e-commerce market totaling an estimated $95.5 billion in November and December, there’s a lot on the line. AMZN stock in particular has a lot of hype to live up to: It has rallied more than 110% in 2015, and with shares trading at 118 times forward earnings, it needs to keep delivering or risk suffering a nasty pullback.

As of this writing, John Divine was long AMZN stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/amazon-com-inc-amzn-google-shopping-goog-googl/.

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