With reports emerging that Google is making overtures into Amazon territory with a ‘buy button’ and newcomer Jet.com potentially pricing it out with a subscription service, it looks like Amazon is in a David and Goliath situation.
As in, on one side Goliath is looking hungrily at Amazon, whilst David is preparing his slingshot on the other.
According to the Wall Street Journal, Google is finally making an explicit move into e-commerce by testing a ‘buy button’.
Google already has a foot in the door of the e-commerce market with Google Shopping. Google Shopping essentially acts as a collating service that collects product prices and information in one place. Users can type a product into the search engine and then choose a retailer – Amazon, for example – from whom they want to make the purchase. They will then be taken to the product on that retailer’s website.
However, with the ‘buy button’ WSJ says users will never have to leave Google. The button will take the user to a new page where they can input their information and shipping details. More importantly, Google will allow the user to store their credit card details.
Google says it will only be testing this option on mobile platforms and that, at first, it will only be using a ‘small percentage’ of traffic.
The American newspaper also reports that the products will still come directly from the retailers, meaning Google won’t be filling up storage with products. For now.
However, the concern for Amazon is the potential limited interaction with customers. Although, Google says it does not want to irk retailers so it will give customers the opportunity to connect to them through marketing subscriptions. Furthermore, Google says that retailers’ information and products will be very obvious on product pages.
This may assuage Amazon’s fears in the short-term, but we doubt they are welcoming these news warmly. The issue for the e-commerce giant is whether it is ‘when’ , or ‘if’. When or if Google decides it wants more of the e-commerce market, Amazon will have before itself a formidable rival.
Jet hasn’t even launched yet and it is already generating quite the buzz. Its conceit is fairly straight-forward: users pay an annual membership fee of $49.99 and in return they get the lowest prices on products. The company has already raised $220m, reportedly has 1,600 retail partners and plans to launch millions of products in its first week.
Jet poses two major concerns for Amazon. The first is perhaps a more clear and present danger – pricing. It is reported that jet.com’s prices are lower than Amazon’s. That is a huge concern for the company. The second is the founder of Jet, Marc Lore. He has a history with Amazon, and not exactly a rosy one.
His websites such as Diapers.com were being outsold and outpriced by Amazon. His Quidsi company was squeezed by Amazon to the point where he conceded defeat and sold it to the commerce giant for $550m. Although Lore downplays the significance of his interactions with Amazon, one cannot underestimate the personal factor in business.
What can’t be downplayed is what this could mean for Amazon. Had it been just the one game-changer foraying into its territory, perhaps it would have no reason to be concerned, the company didn’t become worth billions without evolving and adapting after all.
However, two game-changers, one of whom is arguably the biggest company in the world and has the market penetration and technology and to beat Amazon, is a different story.
At the very least Google will stop customers having to go on Amazon’s website to purchase products. On the other side, Jet has the potential to disrupt the industry and stop customers from using Amazon at all.
It will be interesting to see how events will unfold and whether Amazon will have an ace up its sleeve.
One thing is for certain, the e-commerce market could be shaken up like it hasn’t been for a long time.
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