FILE PHOTO Twitter, Google, Google, Gmail, Facebook, Instagram and Snapchat are displayed on the screen of an Apple iPhone.
(Bloomberg) — Google executive Prabhakar Raghavan recently had a challenge with his roses. His wife took a picture of the plants on her phone, uploaded the symbol to Google, met the culprit, and followed a link to a fungicide. Then he bought it. .
A smooth transaction that didn’t involve typing in a search bar, it was a kind of genuine verification of Raghavan’s strategic vision. The old executive is determined to split e-commerce, a market that is expected to succeed at $2. 27 trillion by 2025 according to alphabet inc. He has tried and failed to perceive several times before.
In the past, Google tried to emulate Amazon’s online delivery and retail services. rivals, designed to make more consumers with Google.
Earlier this month, at Google’s I/O software conference, Raghavan and his deputies unveiled new features that they hope to achieve that goal, adding one that allows visitors to use images to search for nearby retail products or locate any items in the physical world. with a single click. a camera. And on Tuesday, the company introduced a feature that allows users to move from merchant lists on Google Search to their checkout pages with a single click. Raghavan hopes the projects will convince millions of others to click buy, prompting distributors to buy many other Google ads. .
For Amazon, which has built a thriving business by forcibly leasing its genuine virtual property to small distributors, the threat is that Google may simply give those brands a path to thrive outside the doors of their market. corporate to more aggressively court distributors with discounts on rates, advertising or logistics services.
However, Amazon remains a formidable rival and Google faces daunting challenges. Its renewed push toward e-commerce coincides with a slowdown in online grocery shopping, as consumers return to their pre-pandemic habits. Amazon and EBay Inc. recently reported slower and weaker expansion. profit prospects. In addition, Google has tried to put its generation on the back burner. Turning the site into a grocery shopping destination risks ruining the party and alienating visitors. Before the I/O presentation, Raghavan was careful to say that it would be “super smooth”. If the concept works as advertised, he said, shoppers might not have to think, “Am I doing a search?Am I on Amazon or Google? »
Raghavan is the first Google executive to oversee the technical operations search and classified ads department since Sundar Pichai in 2014, a time before he became CEO. Raghavan is also one of the company’s highest-paid executives, with a $28. 6 million drop last year in salaries and stock. As such, it has the strength to outline an ambitious e-commerce strategy and, at least in theory, have other people who historically operated in silos collaborate instead.
Those who have worked with Raghavan point to his technical mastery and operational acumen, a rare combination of attributes in a company that has rubbed shoulders so much with its inventions and profits. “Google is violently allergic to strategic thinking,” said Sam Ramji, a former executive who worked with Raghavan on Google’s cloud products. “This is the guy who took the strategy to Google. “Martha Welsh, Google’s director of business strategy: “She actually has a holistic view of corporate. “
Since raghavan’s promotion in mid-2020, it has trashed Google’s e-commerce playbook, the fees the company charges for online purchases, and the shutdown of the delivery service. Google’s payment operations abandoned their banking plans and concentrated. He even commissioned his research department to collect the wishes of other people who made heady business decisions, such as buying a house or opting for a university.
“He’s in a position to take ambitious steps,” said Bill Ready, Google’s chief commercial officer, who joined in 2020 as one of Raghavan’s most sensible deputies.
Boldness is required. As Google’s advertising operation continues to print money, the style is under siege through regulators and privacy enforcement measures, in addition to Apple’s ban on targeted marketing messages. only one enters e-commerce to generate income; Meta Platforms Inc. and TikTok as well.
Meanwhile, as Google tries to create an online grocery shopping destination to complement its advertising business, Amazon has done the opposite: It created a physically powerful advertising operation in most of its huge online marketplace. Google’s good fortune is hard to assess because it doesn’t exploit online sales or retail ads. Amazon is easy to see; its advertising business grew by 23% in the first quarter. “It turns out that things are much better for Amazon than for Google,” said Mike Ryan, portfolio strategist at Smarter Ecommerce GmbH.
Raghavan has connected Google’s top revenue and profit drivers, namely search and ads, with its e-commerce efforts more intensely than ever before. All this puts more pressure on him to implement his strategy.
Express Purchase
Google’s most recent big e-commerce push was to take on Amazon head-on. In 2013, Google introduced Shopping Express, a delivery service with a nifty app and the promise of shipping many parts the same day. Google had massive retail partners on board, adding Target Corp. and Walgreens, and provided an annual Amazon Prime subscription model. At the time, when fast e-commerce delivery was a novelty, Google’s service seemed like a natural competitor to Amazon.
But it never was. Shopping Express expanded to some cities outside the San Francisco Bay Area, but had little appeal to consumers. Google’s “Shopping” site, available as a tab on its homepage, grouped lists of online stores with paid classified ads at the top. however, it attracted few visitors compared to the main search page. Former Google workers say managerial indecision and reluctance to invest heavily in low-margin businesses have undermined the strategy. Then, in 2015, Europe hit Google with a massive antitrust lawsuit that argued the search engine was unfairly selling its own grocery shopping service over others. This forced the company to divest itself of the European business and act more cautiously.
Google recruited BCG experts to benchmark a fast e-commerce strategy, but didn’t follow the company’s recommendations. The company shortened the delivery service call (to Express) and changed it to focus on its virtual voice assistant, another competitor. to Amazon. This effort also failed. “For more than 15 years, Google has been looking to perceive commerce,” said Rick Watson, head of RMW Commerce Consulting. “And they never did. “
In early 2020, Google restarted its strategy. Management recruited Ready from PayPal to run the business unit and realigned the research, invoice and card departments to work more strongly with their own. To manage this entire portfolio, Google chose Raghavan, a veteran of its business department that, in terms of 2018 classified ads.
Before joining Google in 2012, Raghavan spent years in generation and academic study labs, where he became an expert in internet search technologies just as they were starting to take off. He speaks five languages and behaves more like an instructor than a senior. executive. While discussing Google’s resolve to emulate TikTok’s visual and fast features, he said, “It’s up to us, too, to start thinking about those paradigms. “He once asked for classical music to accompany his frontal level on one occasion before a staff. the member intervened.
“He’s surprised when he takes on more responsibilities,” said Jayshree Ullal, an old friend who runs Arista Networks Inc. “You can never say he’s Google’s second senior executive. “
Still, Raghavan made his e-commerce ambitions transparent in the first year of his new role. Google, he told his colleagues, deserves to think about “traveler” users, not just Google. com for information, but also for searching and buying something.
He and Ready temporarily abandoned Express. They abandoned the commission Google charged for home sales and the fees it charged merchants for posting items on its shopping site, a signal to the industry that it was looking to be an open market, not a marketplace. competitor. ” We don’t look to put boxes on the door,” Ready explained. “What we are looking to solve is the informational component of the problem. “
With this, Ready meant that it was less difficult for consumers to locate the desired products, offers or brands, even those who did not buy an ad. Search effects now identify discounts and loyalty programs, while new widgets list shipping prices and hidden fees on express purchases. Google has agreements with Shopify Inc. , Block Inc. and other business corporations to incentivize businesses to sell on Google properties.
These features are designed to buy products such as shoes and pans. But the company is also experimenting with pieces not found on most e-commerce sites, helping consumers buy NFT through symbol searching or searching for purchases as important as real estate. The company has detected that web users looking for a house, a university or a car return to Google more than 60 times with similar queries before making a decision. The concept is to customize search reports for those usage instances in a way new to Google. .
Google has already done this with some categories, creating exclusive features for other people looking for a task or a hotel. Companies like Yelp and the online industry have complained that those tweaks have buried their sites and forced them to buy more classified ads to get clicks. Google’s studio team is quietly working to add more themes. As part of the project, called Mercury, the research team gave the advertising organization spaces such as “shopping, real estate, mortgages, etc. ,” according to a reviewed note through Bloomberg. The paper’s authors prioritized expanding traffic for merchants and creating “oh wow moments!”This would entice scholars to Google. com and, eventually, to a purchase. The classified ads department did not influence the unpaid search results.
Raghavan said the company has no plans to compete with genuine real estate agents like Redfin. And, until now, Google has resisted using normal visitor search history to personalize results. This is largely to avoid violating people’s sense of privacy, he explained. “Can you, in those situations, offer more to the user on a long-term journey, without scaring them?”Raghavan said his groups were still exploring whether they could.
Some in Silicon Valley have criticized Google for filling the search effects with too many ads. Raghavan said growing demand from advertisers is likely to be the cause of the pandemic behind the recent ad buildup, and he expects it to cool down as travel and event restrictions ease. .
First success
There are signs that Raghavan’s strategy is starting to pay off. Earlier this year, Google revealed that e-commerce advertising was one of the most sensitive participants to the 43% increase in profit seeking in 2021. Google also said last year that more than a billion other people shop in their homes every day, though it hasn’t updated the figure. In the fall, Morgan Stanley studies showed that consumers used Google and YouTube to search for products and cost more than they used Amazon, eBay or Walmart. In April, the bank reported that 59% of respondents who are Amazon Prime members said they started searching for products on Google, up from 50% in the fall.
Talley
Still, some industry experts say the main steps Google is taking to create a marketplace — reducing commissions and sign-up fees for merchants — have yet to attract a significant number of buyers. When those adjustments were announced, some merchants were ready for a surge in traffic and sales, said Ryan, the e-commerce strategist. “Then nothing happened,” he said. I would describe it as pleasant, but low impact. “
Kirk Williams, head of online firm Zato Marketing, said he wouldn’t be surprised if Google’s paid updates don’t replace the customer’s habit enough to attract more merchants. Page, where merchants still pay, have to buy classified ads to present themselves to customers. “It wasn’t close to the volume of traffic they expected to see,” Williams said.
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