Google Checkout Line
Google introduced Google Checkout online shopping and payment service Thursday, integrating the purchasing option with its search and advertising programs in a move that may threaten eBay’s PayPal service.
The service will display a special Google Checkout icon next to ads that show up from Google’s AdWords program. Consumers can visit the site, select the Google Checkout option when they make a purchase, and fill out their shipping and billing information.
Then whenever they visit that site or other merchants’ sites that offer Google Checkout, the service will automatically use that same information so consumers don’t have to keep filling out their billing information.
Shares of Google rose $2.13 to $408.24 in recent trading.
The online payment business could be an extremely lucrative one for Google to enter. The company is also integrating its cash cow online advertising business with its widely used search engine to make even more of an impact on web commerce.
“What we’re trying to do here is increase the velocity of the system,” said Benjamin Ling, lead product manager of Google Checkout. “Sellers can advertise and convert more quickly, and overall it’s a better user experience for buyers.”
Ka-Ching at Checkout Registers
Google has already signed up major credit card companies Visa, MasterCard, American Express, and Discover. It is also running a special promotion with Citi, which is offering its customers a $5 incentive (or 1,000 bonus points) to sign up for Google Checkout.
In addition, the Mountain View, California, search king has signed up several major online retailers and brands, including Buy.com, Timberland, Starbucks Store, Levi’s, GNC, Tweeter, and Jockey.
Google is also offering special incentives to merchants and advertisers with the program to convince more to sign up for Checkout. The company is touting the fact that the Google Checkout icon will make it easier for shoppers to find their stores.
In addition, when shoppers buy with Checkout, AdWords will process all of a portion of their sales for free. Plus, for every $1 that merchants spend on AdWords, Google will process $10 in sales through Checkout at no charge.
Google is making money from the service by offering these types of incentives to advertisers to use it. Consumers don’t have to pay extra to use the service. Sellers who don’t advertise pay a flat rate of $0.20 per transaction plus 2 percent of the purchase price, which is less than most credit card processors.
“Google Checkout could have a dramatic effect on the Internet landscape as it will impact both search and e-commerce sectors,” wrote Piper Jaffray analysts Safa Rashtchy, Aaron M. Kessler, and Paul J. Bieber in a research note.
They believe the integration of Google Checkout with AdWords has the potential to increase click-through rates on Google searches significantly as well as increase e-commerce conversion rates.
“Together the higher click-through rates and higher conversion rates represent a double economic benefit to Google advertisers, which we believe will result in additional search share gains as advertisers realize more benefits from Google and its expanding ecosystem,” the analysts wrote.
Protecting Confidentiality
For consumers, Google is promoting the idea that the service will help protect the security of their online transactions and help them avoid spam by hiding their email addresses if they want to keep the information confidential.
To streamline the transactions, the service integrates with several online commerce platforms, including GSI Commerce, MonsterCommerce, and ChannelAdvisor.
To be sure, Google Checkout will face competition from other online payment services such as PayPal, though Google says it’s not trying to compete with its partner eBay. But the service does represent a way for Google to make good on its growth promises to shareholders.
The service isn’t only available to Google advertisers. Google is offering it to any other merchant in the United States as well, and Google also wants to make it available internationally. Google is looking at both Europe and Asia, according to Mr. Ling, and plans aggressive rollouts, but is not yet ready to announce any timelines
Mr. Ling said the service differs from PayPal. “We’re focused on streamlining the checkout process,” he said. “It’s not like anything else that came before.”
He does not think the new service will adversely affect Google’s existing relationship with eBay. “eBay is a valued partner of ours,” said Mr. Ling. “They are one of our advertisers, and we have a longstanding relationship. We appreciate their business and we’re happy that we’re working together.”
source: www.redherring.com
writer: MCohn@RedHerring.com