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Google and Product Search

I have been reading and thinking about the latest edition of the ecommerce cold war between Google and Amazon.

Google Inc. plans to push deeper into online commerce by enhancing its Google Shopping service with features that more directly challenge Amazon.com Inc.

Google has approached retailers about creating a “buy” button for its online shopping site that would be similar to Amazon’s popular “one-click ordering” feature, according to people familiar with the discussions.

It is becoming increasingly clear to me that Google has serious concerns over the ambitions and dominance of Amazon in product search. Bill Gurley made a very interesting point in a recent interview on Bloomberg (video) where he said that Eric Schmidt said the following when asked about their biggest competitor:

If you are looking to buy something, perhaps a tent for camping, you might go to Google or Bing or Yahoo or Qwant, the new French search engine. But more likely you’ll go directly to Zalando or Amazon, where you can research models and prices, get reviews, and pay for your purchase all at once. Research by the Forrester group found that last year almost a third of people looking to buy something started on Amazon — that’s more than twice the number who went straight to Google.

For one thing, these companies are each others’ biggest competitors, because in tech competition isn’t always like-for-like. Many people think our main competition is Bing or Yahoo. But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon. They are obviously more focused on the commerce side of the equation, but, at their roots, they are answering users’ questions and searches, just as we are.

The context is important here – Schmidt was talking to a European audience at a time when he was defending Google’s business to European legislators whom are currently looking at Antitrust cases for Google’s various businesses. The point is that Amazon was until this conversation never publicly mentioned as a search competitor for Google huge search index.

Amazon launches Kindle unlimited, eBay has a negative quarter – eCommerce stories of the week

Last week was dominated by 2 stories – eBay posting disappointing results and Amazon unveiling a “all you can read” Kindle package. The eBay news is not surprising – Google hit the company with a search penalty based on low quality content and also eBay is still battling with the after effects of being hacked. Those two elements by themselves will harm any Internet business – together they will harm a large business for a few quarters. The bad results could not come at a worse time for eBay. They have potential competition entering a part of the business (11 Main) and am also facing less than desired results on their eBay Now business.

Amazon seems to be moving at a faster rate than normal with regards to the ecommerce business. The Kindle unlimited service seems to me to be an unAmazon product. The selection at launch is poor (not one of the big 5 publishers has books that you can read) and seemingly this product went to public release inside 7 days. I am still trying to understand why Amazon would want to do this? Is it a reaction to Oyster? Is it to force the big 5 publishers to provide them with ebooks? or is this primarily to drive more revenue to the Amazon published ebooks?

Alibaba vs Amazon – 2014 Edition

When I wrote my first post on Amazon in which I looked at the competitors it will face; back 2012, I had 7 major ecommerce businesses that could destabilize Amazon’s domination in ecommerce:

Amazon is and still is it’s own biggest concern
Apple
Alibaba
eBay
Walmart
Rakuten
Regional players (Netretail, Ozon, MercadoLibre)

Fast forward 2 years and a variety of changes (global economic changes, investments and the rate of offline and online retail convergence) – the above list changes considerably. The growth in single global brand ecommerce businesses has grown remarkably primarily through the globalisation of ecommerce.

Let me be clear – I am of the opinion that regional ecommerce competition is a less of a factor now as the global competitors can at any time launch in a market. Global ecommerce businesses (Amazon, eBay, Rakuten etc) have the potential to invest significantly in a market through funds and staff.

The week in News for Amazon (AMZN)

The week that ended was one that had the entire digital industry looking at a Seattle, Washington company. Amazon and its founder Jeff Bezos had quite a bit of ink, pixels devoted to them. There is such a lot to think about, it kinda lead to one post on the topic (The 10 stories post is going to be written as soon as this is done).

Washington Post

When I read about Bezos selling his stock, my attention got diverted into “I wonder what Bezos has in mind..” and then I got busy at work. When Bezos sells stock (which generally occurs very seldomly) generally it means cash is needed for something (normally an acquisition). The fact that he spent $250 million to buy the Washington Post and made it clear that the acquisition is in his private capacity for me are clues that this purchase was long time in the works. No-one saw this coming which communicates just how close Bezos keeps his cards to his chest

Why?

Bezos has bought the Washington Post to save a business that is facing extinction. The long term thinking that Bezos has shown will ensure that Washington Post survives. There are a few things that Bezos has shown me with this purchase:

He loves content. May it be books, e-books or news, he has a love for knowledge. The Washington Post is another platform that creates thousands of words and articles per year. The need for news will always be a factor in newspaper’s long term future. You cant create algorithms for that – human editors and writers are needed.
If an opportunity arises that leads to an acquisition – Bezos will take the chance but it will be on his terms. There is a reason why he purchased one of the most historical newspapers in the US. It may be influence, the opportunity to change the newspaper industry, potentially have another business that he can leverage to provide sales to his day job (Amazon.com) – may it be a Kindle etc.
The Washington Post provides another data set for Amazon to potentially incorporate into their algorithms. (I wonder if the Washington Post will be seen on Google news when the sale completes?)
The Washington Post is Bezos second news related investment. Earlier in the year, Bezos invested in Business Insider.

The Washington Post under Bezos’s ownership is going to be something worth keeping an eye on.

Amazon – The Art Gallery

Amazon has also announced that is selling art. Needless to say this news will concern art gallery owners. It is becoming clear that Amazon wants to be the “Walmart of the web”. Being able to buy whatever you need, Amazon is to be your starting point towards a purchase.

Amazon.com, Inc. today announced the launch of Amazon Art (www.amazon.com/art), a marketplace that gives customers direct access to more than 40,000 works of fine art from over 150 galleries and dealers. At launch, Amazon Art will showcase artworks from more than 4,500 artists. The store is one of the largest online collections of original and limited edition artwork for purchase directly from galleries and dealers.

The art space will be disrupted by Amazon or it might be another story as seen with Amazon’s struggle with wine selling.

Amazon moves into Russia

Amazon has started to hire for staff in their Kindle division in Russia. The Kindle Store is the trojan horse for Amazon as that is normally the first path to market entry. We have seen this same behaviour when Amazon entered India and Brazil.

When I first heard about this news, I thought Amazon was going for a strictly digital play. But if the detail about the trademarks is true then the Kindle Store is but the tip of the spear. Amazon is probably repeating the strategy they used when they launched in Brazil. Their first operation in that country was the Kindle Store, which launched in December 2012. So far as I can tell Amazon has yet to launch a retail operation in Brazil, but it is probably in the works.

The emerging markets are steadily getting more attention from Amazon. Brazil, China, India and now Russia is seeing more investment from the Seattle company. Ozon.ru has been placed on notice, Amazon is on the way.

Amazon doing an FBA pilot

Earlier today a reader contacted me with some very interesting information on a pilot that Amazon is testing currently. The contents of the communicated has been redacted to protect the identity of the source but a few things are clear to me.

One – Prime is becoming more important for Amazon to combat the impact that Google will have on their business and bottom line. Being able to provide a standard Amazon experience to all shoppers and then leverage Prime to enable more transactions just highlight just how valuable Prime is for the Seattle company. Amazon Prime is the worlds greatest loyalty program.

When Bezos and co create a revenue generation opportunity via a new investment or feature it is to be leveraged multiple times to recoup that investment. This very factor makes me realise just how far Amazon is in front of their competition. Think of it as Lean Startup meets Walmart.