) is upping the ante on its online shopping services. For some time
now, the Internet search giant has been building its online
shopping capabilities. If Google is successful, it could give
Internet retailers like
) a hard time.
Google Shopping, as the service is now called, is frequented by
customers searching online for products. Products searched on
Google automatically have the Google Shopping link at the top, with
Amazon and others following. However, retailers and online
marketplaces have so far featured quite prominently on Google
Shopping as well and this is the service that Google intends to
Amazon has been making billions from the sales that Google
directs to its properties and earlier this year, Google announced
its decision to cash in on this opportunity. Therefore, starting
October, retailers will have to pay a fee to get featured on Google
Shopping. Payment methods and details are scarce as of now, but
this could actually be a positive for retailers in the near
Google promises to weed out spurious sellers and its advanced
algorithms are likely to improve the relevance of searches,
effectively bringing the consumers to their purchases sooner.
In the long run however, retailers could be hurt because
Google's comprehensive retail strategy (product search, comparison
shopping, reviews and wallet) could soon make it a marketplace unto
itself. However, there are other aspects to retail, such as
fulfillment, which will neither be easy nor quick for Google to
build up. Amazon is far ahead in the race here and eBay will also
be way ahead by the time Google starts (if it does at all).
We think that Google has devised a solid strategy to improve
monetization of its search technology. Investors are clearly
excited at Google's growth prospects, sending the shares up over
34% in the last three months.
Google retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
AMAZON.COM INC (AMZN): Free Stock Analysis
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GOOGLE INC-CL A (GOOG): Free Stock Analysis
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