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Alphabet Eliminating Fees for Google Shopping Merchants, Putting Pressure on Amazon.com

By Eric Volkman – Jul 23, 2020 at 6:31PM

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Sellers currently on the site will be transferred to the new system within weeks.

Alphabet's (GOOG 1.05%) (GOOGL 1.05%) Google made a potentially game-changing announcement regarding its eCommerce unit on Thursday. The company said it's entirely eliminating the fee it charges retailers to transact with customers through the Google Shopping service.

Existing sellers on the site will have their accounts transferred automatically to the 0% regime within the next few weeks. Those coming new to Google Shopping will be added to the no-commission program right away.

Happy man buying merchandise with a credit card through his smartphone.

Image source: Getty Images.

This is a clear attempt to weaken the dominance of Planet Earth's eCommerce giant, Amazon.com (AMZN 2.00%), which features goods from thousands of outside merchants around the globe.

Alphabet's Google is making the transition from Amazon to Google Shopping quite straightforward and simple. In its press release on the elimination of fees, it tellingly wrote that merchants can upload product feeds in the format they utilized for their Amazon online "stores."

Google said in its press release that the shift to 0% commissions ensures that it "is even more of an open platform for digital commerce, where merchants of all sizes can sell for free, using the tools and providers of their choice."

Not every meaningful action through Google is going to be free, however. The tech titan will continue to sell slots for Shopping merchandise to appear in paid entries above free listings generated from searches on the main Google site; product ads, also paid, will be placed on these pages, as well. By contrast, free listings for third-party seller merchandise will only appear in the Shopping tab of Google's main site.

On Thursday, both classes of Alphabet's stock fell by just over 3%. Amazon declined at a marginally steeper rate. All fell harder than the wider equities market on the day.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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