Alphabet Inc’s Google is going to take a commission on purchases you make on e-commerce sites after doing searches online, Reuters reported.
The trade commission will be from e-retailers, indicating that Google is going for a huge revenue generation opportunity in coming quarters.
The U.S. technology company is teaming up with retailers including Target, Walmart, Home Depot, Costco Wholesale and Ulta Beauty.
Retailers can list their products on Google Search, as well as on the Google Express shopping service, and Google Assistant on mobile phones and voice devices. Google, which competes with Microsoft and Facebook, is the world’s largest search engine for online users.
In a recent report, Technology Business Review (TBR) said Alphabet sustained revenue growth across its segments in Q4 2017 and Google maintained dominance in the advertising space as mobile search drove higher revenues. Advertising growth of 21.6 percent was complemented by even stronger growth from the host of businesses – namely YouTube, Hardware and Cloud.
“Margins deteriorated as the company expanded product lines, invested in Google Cloud, and drove traffic acquisition costs (TAC) upward with mobile search. The 55.9 percent gross margin was Alphabet’s lowest since Q3 2012, impacted by TAC and increasing production of hardware,” said Michael Soper, senior analyst at TBR.
How Google makes money?
Retailers need to pay Google commission on each purchase in exchange for Google listings and linking to retailer loyalty programs. This is totally different from payments that retailers make to place advertisements on Google platforms.
Google’s pitch to retailers is a better chance to influence shoppers’ purchasing decisions, a move that is likely to help them compete with rival Amazon.com. Google hopes the program helps retailers capture more purchases on desktop, cell phones and smart home devices with voice search – the next frontier for e-commerce.
The previously unreported initiative sprang from Google’s observation that tens of millions of consumers were sending image searches of products, asking “Where can I buy this?” “How do I transact?” Daniel Alegre, Google’s president for retail and shopping, told Reuters exclusively.
Daniel Alegre said mobile searches asking where to buy products soared by 85 percent over the past two years.
Both Walmart and Target last year struck deals to appear in search results via Google Home.
Smart voice devices like Amazon Echo and Google Home will be installed in 55 percent of U.S. households by 2022, according to Juniper Research.
Amazon’s Alexa platform could generate $10 billion in revenues by 2020, a separate report from RBC Capital Markets estimated.
A recent Google report said that the potential for digital spending in India is expected to grow 2.5 times from $40 billion to $100 billion by 2020 led by sectors such as Ecommerce ($18-45 billion), Travel & Hotel ($11-20 billion), Financial Services ($12-30 billion) and Digital media ($200-570 million). Women, new users from non-tier 1 cities and 35+ years shoppers will drive this growth in online spending.
Baburajan K
