Alphabet Inc’s (NASDAQ:GOOGL) Google and Amazon.com, Inc. (NASDAQ:AMZN) have been butted heads repeatedly in recent years. In the latest clash between the two, Google strikes directly at Amazon’s core business: online shopping. A new program called Google Shopping Actions aims to turn search queries about buying a product into a purchase — through an online-retail partner that is not Amazon — with a cut of the purchase pricing going to Google.
Some of the biggest U.S. retailers are reportedly already on board with Google Shopping Actions, including Walmart Inc (NYSE:WMT), Home Depot Inc (NYSE:HD) and Target Corporation (NYSE:TGT).
Google hasn’t made an official announcement yet, but chose to unveil its new program through an interview with Reuters.
What Is Google Shopping Actions?
Google noted that millions of consumers were initiating searches for a product, and including the the term “Where can I buy this?” In particular, mobile searches asking where to buy products were up 85% in the past two years alone. And the end result of these queries was often a purchase at Amazon.
Google Shopping Actions is a new program designed to intercept those Amazon shoppers and instead direct them to a competing retailer. The catch? That retailer has to partner with Google, forking over a percentage of any resulting sale.
The way the program works is that participating retailers sign up to list their products on Google Search, Google’s Express shopping service and Google Assistant. When a consumer asks “Where can I buy?” one of these products, they’ll see the usual listings — including Amazon. For a retailer that participates in Google Shopping Actions, the consumer can click to buy (or tell Google Assistant to buy) and it will be added to their Google Express shopping cart. This makes it easy to buy multiple products and to do so using voice. It removes friction and the single cart makes the experience similar to the ease in buying from Amazon. The hope is that instead of choosing Amazon by default, they’ll pick those Google retail partners.
A Google representative told Reuters:
“We have taken a fundamentally different approach from the likes of Amazon because we see ourselves as an enabler of retail. We see ourselves as part of a solution for retailers to be able to drive better transactions … and get closer to the consumer.”
Though Google Shopping Actions is new, the concept isn’t. Last year, both Walmart and Target signed up to have their products show up in searches on Google Home smart speakers. And according to Google, early partners saw their customers’ chopping cart value increase an average of 30% as a result.
Questions
Google Shopping Actions raises some big questions that Google hasn’t yet answered.
For example, will Google place results from partner retailers higher in search rankings?
And Search Engine Journal raises other issues, including whether partner offers will be labelled as such and whether voice searches using Google Assistant and Google Home will return the lowest price — or default to a partner retailer.
SEJ also reported that Reuters may have used Google Search as shorthand for Google Shopping.
If Google Shopping Actions uses the former, then it would raise concerns about Google’s organic search (and the ability of bigger retailers to pay for higher search rankings). Since there has been no official announcement from Google and Google’s own public search liaison Danny Sullivan voicing doubts, at this point in seems unlikely that Google’s regular search will be affected.
Impact for GOOGL Stock?
Anything that affects search ad revenue has the potential to impact GOOGL stock. That’s where the vast majority of the company’s revenue comes from. With Google Shopping Actions, the company could potentially score big by getting a cut of the purchase as well.
Regardless of how big Google wins with Google Shopping Actions, Amazon is likely to come out as the loser. And given how the two tech giants have been duking it out lately, that alone may have been reason enough for Google to launch the new program.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
