Google(NASDAQ:GOOG) (NASDAQ:GOOGL) wants to take on Amazon, eBay, and other online retailers. The search giant, which has never been a major player when it comes to online shopping, plans to change that by making it much easier for people to purchase goods through its search engine.
The company plans to integrate "buy" buttons on its site, thus streamlining the sales process, according to The Wall Street Journal. Google already places paid sales listings above or alongside its search results, but the new setup would make purchases even easier.
To be clear, Google is not opening up warehouses or becoming an actual retailer. Instead, the company is taking what it does best -- providing search results -- and making them more useful. This is an attempt to simplify the process, directing sales to its partners and potentially stopping users from leaving the search engine to visit an online retailer.
Amazon has built its empire by making buying easier -- now Google is attempting to beat the online megastore at its own game.
Google is not opening a store
Google will not sell any items directly, according to the Journal. Instead, the company will display the buy button, allowing appropriate third-party stores to fulfill the sales. The buy button will initially only appear on mobile devices -- Google says the intent is to make its advertisers' paid listings more effective. According to the article, "Google has told retail partners that it is adding a buy button to reduce friction for users on mobile devices, increasing the chances that they will make a purchase, known as a 'conversion' in the digital ad business, two of the people said."
The buy button will only appear with paid listings -- companies that advertise with Google -- and not on regular search results. The program is not about making it easier for users to shop with anyone but rather to enhance the value of paid ads on the site.
All about transactions
Once customers click the buy button, they will be taken to a Google product page to finish the transaction. "On that page, they will be able to pick sizes and colors and shipping options, as well as complete the purchase," according to The Journal.
One key idea here is that search results for products on mobile devices are less effective, because customers might find the item they want be unwilling to enter payment information on a phone or tablet. This could (and probably does) drive them to Amazon or another retailer where they already have an account with payment information attached.
To mollify retailers' concerns, Google will allow consumers to opt into the same marketing programs that they would be exposed to had they made the purchase on the retailers' own websites, one of the people said. That means retailers will get address information and likely email addresses for future marketing efforts as long as shoppers opt in.
That sounds like a reasonable accommodation and a way for Google to thread a narrow needle. The company needs to keep its advertisers happy and drive sales without stealing their potential customer base. It is a difficult balance as completing sales through a Google login means the retailers will not have the customers' credit card information.
Without that data, the retailer has not created a relationship with the customer that puts it on equal footing with Amazon or eBay.
These are the early stages
Google is simply dipping its toe into the water here. The buy button will only appear in mobile search results and only a fraction of those, according to the paper. The search leader will not take a cut of sales, according to The Journal. Instead, the program will enhance ad sales and entice people to add a credit card to their account which Google could potentially leverage at a later date.
Other online giants have profited from giving consumers buying opportunities. Apple might be the best example of this with iTunes and its App Store, but Microsoft profits similarly (if less successfully) through its online stores. Google, of course, already sells music, video, and games through its Play store, and processing hard-good sales for its retail partners is just an expansion of those efforts.
This is a small move for Google, but it marks the beginnings of a significant opportunity. If users grow accustomed to shopping with their Google login, then the company could become a major rival to online retail leaders. That might be a long way off, but the buy button brings it significantly closer to reality.
Daniel Kline owns shares of Apple and Microsoft. The Motley Fool recommends Amazon.com, Apple, eBay, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, eBay, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.