Google dominates the search market with a better than 90% share, but when it comes to actually buying something, more often than not, people begin their search on Amazon.com's (NASDAQ:AMZN) website.
Data from Jumpshot shows that as recently as 2015, the Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) search engine led with 54% of all product searches beginning in its search bar, with Amazon in second at 46%. However, three years later, the positions have reversed, and now 54% start on Amazon and 46% on Google.
While Amazon might be on top, there are signs that others in the space are also making headway.
Considering Amazon's website is focused on selling stuff, it shouldn't be too surprising that it's the leader. Jumpshot says nearly 90% of Amazon's product views come from the company's own product search and not from advertising, merchandising, or product aggregators, and an analysis by Recode shows that Amazon has been stuffing its site chock-full of Amazon-sponsored ads. It found that everything visible on the page before you begin scrolling is sponsored, often followed by ads for its own products. You have to scroll halfway down to get to organic content.
While that speaks to Amazon's prowess in marketing -- and underscores why advertising is the fastest-growing component of its business -- it also hints at the e-commerce site approaching a saturation point.
Amazon already has an 80% market share or better in many of the most important categories, including health (92%), electronics (89.9%), sports and fitness (89.6%), household essentials (88.8%), home improvement (83.8%), and food (81.8%). Although it can still expand its presence in furniture (47%) and women's clothes (42%), there's not much more room for growth that it's going to be able to achieve. In fact, it may soon find itself losing share, not from Google, but from Walmart (NYSE:WMT).
A surprising challenger
Walmart has spent billions bolstering its e-commerce initiatives, buying Jet.com, investing in Chinese online seller JD.com, and acquiring 77% of India's Flipkart. The company has committed to seeing e-commerce sales grow 40% in fiscal 2019, and after a slow start to the year, it hit that number in the second quarter.
According to Jumpstart, Walmart saw its share of product search grow 3.5 times faster than Amazon, albeit starting from a much smaller base. It is growing fastest in women's clothes and beauty, but is also seeing tremendous gains in all the categories that Amazon dominates. Food and household essentials each grew over 116% year over year, while home improvement was up by nearly 64% when the category itself grew just 34%. In contrast, Amazon saw product search growth rates in those areas of between 21% and 29%.
It's notable that in home improvement search, Walmart's share is 16%, the same as Home Depot, and though Amazon far outstrips them, it actually saw its share fall by 3% year over year.
Amazon may have pulled all the levers at its disposal to completely dominate product search, and the company expects the segment to be a multi-billion dollar business. However, having grown to such a position, other players are recognizing the power of advertising on product-based platforms and could eat into the e-commerce giant's slice of the pie.