How Amazon Prime delivery hurts Google’s ad business

http://www.slate.com/articles/business/moneybox/2014/10/google_amazon_competition_how_amazon_prime_delivery_hurts_google_s_ad_business.html

by rpm4321 • 12 years ago

91 39 12 years ago

slate.com

TrevorJ4• 12 years ago

Perhaps if Google had not gotten greedy and made google shopping pay-to-play they would have had a shot at it.

Pay-to-play hurts consumers a lot because the search results are tainted by it, and it hurts adoption because google is double dipping with it's own CPC customers.

sounds• 12 years ago

That's a great point.

I came to ask whether it is likely Google will be improving their product search? As someone who remembers all the way back to Froogle, I still find myself on product search, obsessively checking amazon, google, ali express, ebay, etc. to try to find the best prices and to find competing products.

Most often, that leads me to Asia. [Yes, I'm a geek, so most days I'm looking for consumer electronics.] I don't know but that Google is just as concerned with Alibaba's recent IPO, and Amazon is just a convenient whipping boy.

As a side note, no, I still don't really take ebay listings seriously. Ebay and Paypal are still so seller-hostile that I just use them for research and then try to buy somewhere else.

pinkyand• 12 years ago

to try to find the best prices and to find competing products. Most often, that leads me to Asia.

The problem with the Chinese goods is that it's very hard to locate high quality goods. The review systems are useless(full of junk) , and there's little reliable data about quality in english. So amazon becomes the default.

TrevorJ4• 12 years ago

It's no longer truly product search. It's simply a catalogue of ads that have been paid for.

Animats2• 12 years ago

Even worse, now that Google itself is a retailer, merchants are paying Google to advertise against Google. I wouldn't be surprised if, soon, Google Shopping simply becomes Google's own product catalog.

vidarh3• 12 years ago

Consider that Amazon lets external merchants buy ad space on their pages, as well as pit their own sales against Amazon marketplace sellers.

wutbrodo2• 12 years ago

Google Shopping was absolute garbage before they started charging; sellers just dumped random crap on there and didn't bother updating it because there was barely any incentive to.

For the user, it's the difference between: 1) having a wasteland of outdated, incomplete and inaccurate information or 2) having a browsable set of ads.

In the latter case, you're aware there's money behind the placement, but it's still far more useful than Google trying their best to do organic search over a corpus that's complete crap.

TrevorJ4• 12 years ago

I agree that it was garbage before, but it's worse now. I searched for every variation of "cannon 60D" I could think of today and didn't get one hit. Anecdotal evidence at best, but the point is, Google's business model with google shopping is not setting them up to be a meaningful competitor to Amazon whatsoever. I agree they needed to do something but turning google shopping into a competitor with Google's own CPC service seems like a poor idea all around.

Afforess• 12 years ago

I think Google is at a big disadvantage when it comes to shopping. Amazon already has a powerful ecosystem. You can become an Amazon seller. Amazon sells it's own brand of many items, which are all high-quality, low-price. Amazon has a well-understood review system, with comments. Amazon has fairly strict quality controls, and if something goes wrong, Amazon will bend-over-backwards to make sure it comes out in your favor. I have never been burned in nearly a decade of Amazon usage. I don't know anyone who has.

Google does not has an ecosystem. It does not have strict quality controls. If a delivery goes bad, what will they offer? Google has notoriously awful customer support. I know plenty of people who have complaints about Google products and services. And I don't see how Google can bridge this gap to compete with Amazon. Google and Amazon have different cultures, Amazon treats every day as the first day of business, Google is an ad company. There is a wide chasm between the two ideals. Even if Google spends it's way to parity with Amazon, they have merely caught up. Being equal with Amazon will not cause defections for Amazon. But it will cost Google a lot.

Animats2• 12 years ago

Google has notoriously awful customer support. That's going to be a problem for Google. Google is used to the advertiser being the customer, and they have a big staff to hand-hold big advertisers. End users, not so much. Amazon is reasonably good at customer service, and has a culture of keeping the customer happy even if it costs them something.

Google sells the Nexus phone. For a good time, go to the support page for the device (https://support.google.com/nexus/?hl=en#topic=3424348) and follow the steps for "My phone won't turn on". See what you have to go through before you can even communicate with support. For warranties, they refer you to Samsung, unless you bought the thing through Google Play. They'd probably like to send those problems to Samsung, too, but in the US they run into the Magnuson-Moss Warranty Act, which says the retailer can't do that.

damian20002• 12 years ago

Unfortunately they approach customer service in the same way they approach web apps - scale it up by automating everything.

rquirk• 12 years ago

I've had problems twice with a 2012 Nexus 7 that wouldn't charge any more. Both times Google replaced it under warranty with a refurbished model. On another occasion - related actually, as I had to set up Wallet to get the refurbished unit shipped (they make a charge up front, but it doesn't go through if you ship the old unit back) - my son spent 40€ on virtual clams (sigh), and when I contacted support they refunded the money. This is just a couple of anecdotes, but in my experience the support was good.

rryan• 12 years ago

Having just gone through this for my Nexus 5 (defective GPS), you're wrong.

  - I was on a live-chat with a rep within minutes.
  - They shipped me a new Nexus 5 next-day air.
  - I made sure I had all my data off the old phone.
  - I shipped the old one back with the free shipping label.

No hassle, no fuss. Super impressed.

TrevorJ4• 12 years ago

Google has great customer support... if you spend thousands of dollars in ad buys with them. We had weekly conference calls with google back when our ad buy was in the 40k+ a month range. They won't give you the time of day unless you spend a lot of money with them though, which means 95% of their customers get little or no support at all.

cromwellian• 12 years ago

I won't defend customer service, but I will point out that what Google is doing is 'federated' shopping, and what Amazon does is centralized fulfillment.

Google Shopping Express is basically about using software algorithms to index and manage inventory and a fleet of vehicles across a large number of heterogeneous local brick-and-mortar suppliers. In other words, it brings Walmart/Amazons scale logistics to the local shop.

Fulfillment in Google Shopping Express means supporting your local community, your local suppliers, rather than a big warehouse sitting somewhere.

I view this is fundamentally more "webby"/decentralized and better for the economy than a winner-takes-all-megastore. Create a platform for locals to have their inventory discoverable to nearby shoppers, and an efficient way to offer same-day delivery.

It may not be ultimately as efficient as Amazon's model, but Google Shopping Express seems to be to be putting Amazon's logistics up against the entire local market of your area. This makes Amazon an enemy of your local shops, and Google a naturally aligned ally, that brings customers, and helps with delivery.

Now, the customer service issue will have to be solved. But let's stop with the "ad company" canard, Shopping Express is a technology innovation, not about ads.

higherpurpose• 12 years ago

Everything trends towards decentralization in the long term, so Google's strategy seems sound. Its success then will depend on execution.

vidarh3• 12 years ago

I won't defend customer service, but I will point out that what Google is doing is 'federated' shopping, and what Amazon does is centralized fulfillment.

That's not been true of Amazon for many years. Or, rather, it's not been true that that is the only thing Amazon does.

Amazon federates merchants worldwide, and fulfilment can be via Amazon end to end for merchants that opts for Fulfilment by Amazon. Amazon has stakes in some delivery companies, and in the UK at least they are shortening their delivery paths via Amazon Logistics [1], which provides them with a "halfway house" in the form of their own local delivery depots. But merchants can also opt to do fulfilment themselves.

They are now rolling out "same day pickup": Order by 11.45; have the order ready to be picked up in one of hundreds of locations by 4pm, or order by 7.45pm and be able to pickup from 6.30am the following day [2].

Couple that with Amazon Lockers, and Collect+ (UK network that provides delivery to your local corner shop etc., and Amazon supports delivery to them), and it's clear that Google will be increasingly facing same day options from Amazon backed by an inventory that will be extremely hard to beat.

Google Shopping Express seems to be to be putting Amazon's logistics up against the entire local market of your area.

Over the last year, most of what I purchased via Amazon isn't even available in my local shops.

[1] http://www.telegraph.co.uk/finance/newsbysector/retailandcon...

[2] http://www.telegraph.co.uk/technology/amazon/11162865/Amazon...

ashishgandhi• 12 years ago

If a delivery goes bad, what will they offer?

I have contacted their support for Google Express before. It was because a delivery did not show up. Turns out I had selected the following day as the delivery day. Happy the mystery was solved (user error) I thank them. I get an email a few minutes later with a $5 credit for the confusion.

Another time I ordered a Space Pen with a clip. I got one that was without a clip. I contacted them and they said the one with the clip was no longer in stock. They refunded my money and let me keep the pen. Never asked for the refund.

Google has notoriously awful customer support.

Yeah, I too read that somewhere on Hacker News.

smackfu• 12 years ago

That's good that they are taking support for this particular product seriously. I've also heard they have good support for their paid services.

coldpie• 12 years ago

Completely off topic nit-pick: "It's" is a contraction for "it is" or "it has". "Its" signifies ownership, just like "hers".

"Amazon sells its own brand", since the brand belongs to Amazon. "Even if Google spends its way" since the way belongs to Google.

I know no one likes the grammar police, but it is really distracting to read otherwise well-written comments when they contain such basic mistakes.

fidotron• 12 years ago

Google just consistently take the easy way out. It's the automation thing where they still act like a tiny company that can't afford to solve a problem that will need actual people to resolve it, and so make business decisions based on "which of these options can we automate?" over almost everything else.

opendais• 12 years ago

I think Google is at a big disadvantage when it comes to shopping. Amazon already has a powerful ecosystem. You can become an Amazon seller. Amazon sells it's own brand of many items, which are all high-quality, low-price. Amazon has a well-understood review system, with comments. Amazon has fairly strict quality controls, and if something goes wrong, Amazon will bend-over-backwards to make sure it comes out in your favor. I have never been burned in nearly a decade of Amazon usage. I don't know anyone who has.

Well, I know quite a few people who have. I am one of them. I've had to issue chargebacks in my dealings with Amazon for stuff I bought via them that they failed to deliver on.

Amazon's "strict quality controls" aren't really existent either. They have no quality controls in place beyond the customer feedback/complaint mechanism and some crude delivery/shipment tracking mechanics.

Amazon doesn't have the ability to inspect the merchandise it ships a significant percentage of the time so claiming they have "strict quality controls" is ignorant at a minimum.

AJ007• 12 years ago

I agree with what you say about Google, but I disagree with how great Amazon is.

Amazon has weaknesses. I have had increasing problems with counterfeit products to the point some things I just will not buy from Amazon anymore. There is a huge problem with terrible quality products ranking highly in Amazon's results, especially when it comes to household goods. Whether the reviews are fake, the items been swapped (counterfeiting), or people are just that stupid it isn't clear. Some reviews give adequate warnings and they are very scary. Exploding cast iron cookware? Check.

Generally Amazon's support is pretty good, but once you are buying through third party sellers it becomes a little more iffy. Where does the liability sit if I or someone I know is hurt by a shady product that would never make it in to Wal Mart? The line is not so clear.

Google certainly has the ability to take some market share away if they focus really hard on Amazon's weak points. However, I also suspect those weak points are where some of their hidden margins reside.

ck2• 12 years ago

Amazon's search ability sucks though.

You have to really really work to find legit items similar to what you want if it not a specific brand name item.

Amazon also allows sellers to list cheap oem copies of products right on the genuine manufacturer page.

For example if you want a phone battery from motorola specifically, you better buy it from amazon directly because all the other sellers on that page are cheap oem knockoffs that may not even have the battery temperature sensor inside. If the product directly from amazon goes out of stock, then a fake takes the place front and center.

Here's a specific listing with this problem but there are thousands out there: http://www.amazon.com/gp/product/B002MZZQVY/ Says "genuine motorola" but the product being sold by the vendor is completely fake, cheap oem copy.

damian20002• 12 years ago

eBay and Amazon have become somewhat similar... eBay added stores and I believe is now dominated by 'Buy it now' buttons (i.e. not auctions). Amazon added sellers from everywhere in the world, with duplicated products.

pmontra• 12 years ago

Each of those searches is one less that Google can use for serving up ads

Those are direct competitors but Google is competing also with anything that keeps me away from the Internet. Given that we have Internet access every time we wish, with a phone, any activity that doesn't generate chances to make a search is lost money for Google. Sleeping, first of all. Make your own list for the rest. We can look at Google Glasses in a new light: a device to eventually be able to serve searches and ads everytime we're awake. No adblock there, I bet.

rmsaksida• 12 years ago

One huge advantage Google has over Amazon is a much wider global presence. I understand Amazon has transformed shopping in the United States, but it still hasn't reached most of the world. Google has. In many developing markets, a Google analogue of Amazon would be absolutely killer.

eli• 12 years ago

"You're less likely to find a same-day delivery-ready molecular model set on Google Express, but for everyday needs like groceries and toiletries, the two services are fairly comparable."

Really? I suppose it's probably possible to order milk and eggs from Amazon Prime, but that's not really their wheelhouse. Google Express seems much closer to a Postmates or Instacart (or, uh, Kozmo) competitor

vanderZwan• 12 years ago

As an aside, I consider "here's why" to be one of the most annoying developments in lazy headline writing in recent memory.

cheald• 12 years ago

Along with "This X is/will..." and "You'll never believe..." and other buzzfeedisms.

I've just made it a personal policy to not click headlines that don't actually tell me what the story is about.

JoeAltmaier• 12 years ago

10 ways to ...

{Stuff} they don't want you to know!

sharkweek• 12 years ago

For the cynic in all of us...

https://twitter.com/SavedYouAClick

robomartin• 12 years ago

The other point that is missed here is that today, as an entrepreneur, it is far easier to make money on Amazon than it is with Google. Particularly if we are talking specifically about ads.

discardorama• 12 years ago

It is true. Whenever I'm looking for a product, I go to Amazon, because I know I will find products; not spammy sites, fake "review" sites, etc. that I get on Google. If Google did a better job showing product info, I might use them; but right now I'm not.

How Amazon Prime delivery hurts Google’s ad business

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