Google’s Road to E-commerce

Invested on E-commerce for Times, with Little Success

In the recent two years, Google, the online advertisement giant, took its initiative to invest in e-commerce market. In June, 2008, Google has reached an agreement with Carrefour to sell groceries online. From 2019, Carrefour also bound its online store with Google’s products or services, which provides more convenience when shopping online. Google Home and Google Assistance are two examples.

And then, Google announced its cooperation with JD.COM, with Google’s $550 million investment to JD.COM, the two companies have established a partnership in a wide range. After the investment, Google and JD.COM will work together on a series of strategic projects, one of which is to develop solutions for new retailing in the areas of South-east Asia, America, Europe, and so forth. With advantages on supply chain and logistics and Google’s advantages on technology, the two companies aim at exploring the solution for constructing the infrastructure of retailing for the next generation.

The cooperation with JD.COM aims at achieving two objectives. The first one is to boost digitalization of retail enterprises, and the second one is to shift its search engine to e-commerce platforms, especially for mobile devices, since Google’s product advertisement revenue is already facing challenges from e-commerce platforms like Amazon and the others. It’s quite urgent that Google should define its own advantage in e-commerce.

Apart from cooperation with the other companies, Google also launched a mobile video shopping platform, Shoploop, focusing on “Video + Commerce”, “Entertainment + Commerce” and “Social + Commerce”. And it targets at the young generations like Tik Tok and Instgram.

To ride the big trends of increasing online shopping demand, in April 2020, Google announced that American Enterprises can start their online store in Google Shopping for free. And then extended its free services to Google Search. In addition, it announced in July that enterprises who join the Buy on Google platform do not need to pay any commission. Combining its business with PayPal and Shopify, Google is going to build a better cross-border ecology.

However, Google Shopping, with low brand awareness among the consumers, failed to achieve the expected effect.

The Necessity to Break New Ground

As the well-recognized advertisement giant, Google achieved an advertisement revenue of $116.3 billion in 2018, which accounted for 70% of its total revenue, and exceeded the total advertisement spending of all countries (America excepted). In the same year, Google revenue of global digital advertisement accounted for 32% of total advertisement revenue. The large amount of cashflow from advertisement decreased Google’s motivation to enter other fields. And at present, we can make a conclusion that a company relying too much on advertisement business will not last for long, no matter it’s because of the epidemic or because of the dropping market share.

On the opposite, Facebook emphasizes on mobile payment, invests on small businesses, and develops a series of video APPs to challenge Tik Tok. And Amazon takes the advertisement market share from Google with the help of the AWS and global e-commerce business. The outbreak of Covid-19 helps the development of e-commerce digitalization, and the stock price of Amazon keeps increasing recently, making Amazon the biggest winner among the IT companies. And these make Google (who is counting its earnings from advertisement) feel in danger.