June 29th, 2006

Google Is A Very 1.0 Shopping Engine

by

With the launch of Google Checkout, Google is clearly aiming to be the world’s online shopping engine. The strategy has all the hallmarks of AdWords — Google doesn’t care what you’re looking for, what you find, or where you buy it — so long as Google can make money off of every step of the process.

Here’s the problem with this strategy — from the consumer perspective, Google is not an efficient way to shop online. Google’s blog mentions Starbucks are one of the merchants that signed up for Google Checkout, so let’s try searching for “gourmet coffee.”

Google Gourmet Coffee

There’s nothing wrong with the ads in the search results — each of these gourmet coffee merchants is potentially relevant. The problem is that I have no way to compare them — all I can do is click and browse, click and browse.

Google revolutionized search by leveraging the network effect of hyperlinks to determine relevancy — but the 2.0 efficiencies of page rank are completely missing from AdWords. Sure, advertisers compete on keyword relevance, but I as a consumer am unable to benefit from the network effects of the larger online shopping community. Which of these merchants has the best value proposition for people like me? Where do people like me most often shop? Which has the most relevant products? Which has the best prices?

Navigating Google ads feels like Yahoo circa 1997 — a lot of clicking and browsing in hopes of finding the right fit. The organic search results may be super-relevant, but the “sponsored” results are of limited value because the cost-per-click bids are too big a factor in ranking and there is no information available from my peers. The advertisers are in complete control. The ads are relevant to a degree, and certainly more relevant than the random interruption of old media models, but as a consumer, I’m still at the mercy of the system. And the return on my attention is marginal at best.

To put it simply, shopping through Google is a very 1.0 experience.

Here’s Umair:

Media is deeply personal, social, cultural, human, creative – and so it’s economics aren’t those of simple technological scale, because, more often than not, technological scale kills those things (think Clear Channel roboDJs). The real opportunity is in leveraging the new forms at the edges of the firms – markets, networks, communities – to explode just how personal, social, cultural, human and creative media can be.

It should be painfully clear that, in the Googleverse, media is none of those things – it’s just a commodity filtered, sorted, and “processed” by machines. Which is deeply reminiscent of the 20th century’s scale and scope driven Great Rationalization of consumer industries, where goods ultimately became “commodities” which were “processed” by machine, assembly line, and bureaucracy (think meat-packing, clothes, and cosmetics).

I don’t want an algorithm and a bunch of ad copywriters determining what’s “relevant” for me. I want my peers — people like me — to determine what’s relevant.

If Google increases its dominance of search advertising by dominating checkout, it will drive up the costs of search advertising, which, even in a new cost-per-action model, will ultimately be passed on to me as a consumer.

So Google gets more profitable. And we hand over more data to Google for not a whole lot of return. As Marshall Kirkpatrick observes:

The biggest question then appears to be whether consumers trust the Google brand enough to look to the company for more than just access to the rest of the world’s data, but as a repository for our own data kept private from a world of online shopping vendors.

This of course, brings me back to Jellyfish’s vision — they want to create a system that rewards peer reviewers who help people make smarter buying decisions by putting money in the reviewer’s pocket — a value per RELEVANT transaction — this creates a virtuous cycle, increasing the network effect of information and in turn helping me find what I really want at the best price.

The obvious implication here is that Google is becoming the new Microsoft — far more focused on its own dominance than on innovating and creating life-changing value for it users.

Comments (35 Responses so far)

  1. Scott Karp

  2. for that matter, but to enhance its advertising model by moving towards a “pay-per-action” rather than a “pay-per-click” model. Scott Karp of Publishing 2.0 (who should maybe change the name of his blog to Advertising 2.0) says Checkout isa very 1.0 shopping engine. Technorati Tags: checkout, Google, payment, paypal, Web2.0

  3. Publishing 2.0 » Google Is A Very 1.0 Shopping Engine

  4. I think you’re missing the point. Google wants to be a shopping engine only in that they want to make money off the front (advertising) and back (transactions) of the process, and they want to own the masses of sellers (advertisers) and buyers (wallet holders). They don’t want or need to be the ‘online store’ to both clean up financially and dominate due to the sublte and not-so-sublte ways they can then leverage all those buyers and sellers. Sure a great froogle or ebay or amazon interface in the middle would be better for users and make what they’re doing more complete, but it’s a nice-to-have not a must-have. They’ll get there.

    Google Checkout is a universal wallet. If it wins, it will do so because practically speaking we’d all be better off with a universal wallet and for whatever reason every single attempt to build one thus far has failed. This is a big move and I think it’s gonna work.

  5. Craig — I think you’re missing my point. I’m not suggesting that Google wants to be the store. They want to be the way you find the store — or the product — and for that, it’s a very inefficient system. They dominate the market not because they offer consumers the best value proposition as a place to begin shopping, but because the utility of Google search for finding them information generally has made them a de facto way to start shopping. The utility of the wallet is not the issue — it’s the assumption that they will continue to dominate the “front end” where the real value is created. The inefficiency of the system is ripe for disruption.

  6. Um… isn’t Froogle the G comparison shopping engine? Try a
    Froogle search for gourmet coffee
    . Is that 2.0 enough for you?

  7. Um, no Paul — you still get this laundry list of results with the only differentiation being price across apples, oranges, and bananas. Look at the first result — coffee from CompUSA — give me a break! No wonder Froogle was a total dud. Check out the reviews of CompUSA — yeah, that will help me buy coffee.

    The current crop of shopping comparison engines is also very 1.0 — no leveraging of the network.

  8. If we’re talking about where people start first to shop, then the comparison shopping engines are irrelevant. Amazon is what matters here.

    The greatest general online buying experience right now is Amazon. I will not buy much of anything without consulting many different reviews on Amazon. One-click checkout is huge.

    That’s a lot of what this is about Google going after Amazon’s one-click shopping, just like Amazon is going after Google’s search w/a9.

  9. Jim, I agree about Amazon — the problem with Google’s strategy is that Amazon’s reviews are far more central to its dominance than one-click shopping. Typical of Google, they focus on the technology-enabled value proposition — which is essentially a commodity — rather than the community-enabled value proposition — Amazon’s huge database of reviews is gold for smart shoppers and not easily reproduced.

  10. Your focus on AdWords entirely misses the left hand rail and the social, participatory aspect in determining search results.

    I’m not some Google fanboy, but to claim that Google doesn’t ‘get’ Web 2.0 is like claming someone doesn’t ‘get’ blogging.

    It’s the kind of statement that someone selling something makes. I expect more from you Scott.

    Having a web site that folks reference, and participate on, and then link to as a resource from their own web presences, will outweigh any amount of advertising in the right hand rail, on some site like Jellyfish, or otherwise.

  11. Karl, you’re putting words in my mouth. I didn’t say that Google doesn’t get Web 2.0 — I said that their model does not leverage its full potential. Read the Umair post I referenced.

    And I’m not selling anything Karl. I will defend my analysis point by point, so bring it on.

  12. Scott, very interesting analysis. But I wonder how Jellyfish can become a media as powerful as Google in a near future… How do you see it coming? People going on Google right now, knows that everything is potentially available… Google is the portal towards information and people use it for that.

  13. Apologies on putting words in your mouth. It does seem to speak to your point however.

    “I want my peers — people like me — to determine what’s relevant.”

    You do that everyday by writing here on this blog. And having services like Google, like Digg, like the new Netscape, like one of your blogging peers, provide doorsways to discovering that. These services and tools grow in sophistication as the tools you use to write here do.

    Try it. Do a *specific* search for something like ‘ipod’ on Google and and JellyFish. What I get at Google are some ads, sure. But far more interesting are the results I get from the feeds I’ve subscribed to, and what the web community has linked to. Far, far more relevent search results.

    Where is the guy who talked about tools his mom would want to use? Where has he went?

    There’s no way I’m sending my mom to something as confusing as Jellyfish. If it takes ten minutes to describe a shopping model to my technically aware friends – it has ZERO hope of being used by mom.

    Amazon.com however? Hell yeah.

    You’re posts are trending towards the buzzword-heavy man. I’m sure your mom would disagree with me though :)

  14. Ever heard of Froogle??? Maybe you should re-post this after taking a look at that.

  15. You’re absolutely right..It will be hard to compete with Amazon’s massive library of reviews. Very very hard.

    Google has a certain ethos: It’s better if a computer can infer something than explicitly ask a person for the info. They figure people are lazy, and it’s better, possibly even more accurate, if the computer can infer based on their behavior the same information.

    This is what made Google. They figured out they could infer what the best website was with existing information already out there… the links people use. They didn’t need human editors (yahoo), or a distributed network of human editors (dmoz) to do it.

    Another example. The address book in gmail. It just adds all the people you email, and it puts the ones you email the most frequently, on the first page. Brilliant! I pretty much don’t have to maintain my address book anymore… it just works.

    That’s what Google will do here as well. They will try as hard as possible not to ask people for information if they can figure it out by watching what they do. Adding products purchased can infer an awful lot, far beyond ‘just’ better ad targeting.

  16. Mike, see comments #3 and #4 above.

  17. Jim nails it. I though I don’t think they are assume people are ‘lazy’ – by observing behavior and infering meaning from that, instead of asking people to offer opinion directly, they are giving more weight to people’s deeds over their words at time of asking.

  18. You suggest that there is no way to compare ads on Google and you are correct (although there are things Google could do if to facilitated this if they were so inclined) However, as others have stated Google is the starting point for the search, it is not the end. The problem as I see it is that by putting Google and Jellyfish in the same article you are in many ways talking apples and oranges. Google has no way of knowing the “intent” of the seach especially when you use a term such as “gourmet coffee”. With Jellyfish, you have already narrowed down the intent of the search as you know it is about price / product comparison. Therefore, regardless of what Jellyfish’s vision may be, at the moment, they are primarily a hybrid of the existing shopping comparison and referral sites that already exist. As a note, there are also plenty of product reveiw sites that exist that have rewarded customer for reviews, maybe not as elaborately as Jellyfish, but there nonetheless.

  19. [...] Scott Karp: “Navigating Google ads feels like Yahoo circa 1997.”  [...]

  20. [...] Scott Karp: “Navigating Google ads feels like Yahoo circa 1997.”  [...]

  21. Cyril, you’re right that Google is deeply entrenched, making it a huge challenge for Jellyfish or any other competing model to gain adoption — but then remember how Google got where it is. Some long forgotten players used to dominate search, but then Google came a long and it exploited the shortcomings of the incumbents. The same could happen to Google.

    CT, you’re right that Google serves many purposes beyond shopping, but just look at the heading of their blog post on Google Checkout — “Find it with Google. Buy it with Google Checkout” They want people to start thinking of them as a shopping engine. But the fact that Google can’t tell whether you’re shopping when you search for something is one reason why its ads are so inefficient. I’m using Jellyfish simply as a convenient touchstone for the as yet untapped 2.0 potential that could significantly disrupt Google.

    Jim/Karl — This is Google’s Achilles heel. MySpace and YouTube have shown that people are in fact NOT lazy — peer production is a force of nature that has yet to be harnessed for commerce.

  22. They want to be the way you find the store — or the product — and for that, it’s a very inefficient system.

    Scott, sorry if I misunderstood. I don’t disagree that google isn’t always an ‘efficient system’ for finding things – but for better or worse they’ve won that battle for now. People to start shopping missions at Google in numbers that dwarf all others – so their vertically integrating cart and payments has quite a leg up.

    It’s not whether or not Google is ‘an efficient way to shop’ it’s whether there is – generally speaking – a more efficient way to start the shopping process no matter what you’re buying. For now the market says ‘no’. I too look forward to something that is both better and achieves huge user acceptance. Lots of folks are trying, and the relative rise of the shopping engines over the past 5 years is an indication of both the potential and the fact that even with a specialized result, market share takes time.

  23. Scott, you can’t take yor own anecdotel experience as a shopper/consumer as what will/should/has to happen in the realm of marketing and search. While you may have the time and inclination to check out ever new fangled shopping engine, most people don’t. They default to what their friends and family are using even if it isn’t the “best.” As for Jellyfish, I don’t see it as that dramatic an improvement to get people to change their behavior.

  24. Jim/Karl — This is Google’s Achilles heel. MySpace and YouTube have shown that people are in fact NOT lazy — peer production is a force of nature that has yet to be harnessed for commerce.

    Now you are putting words in my mouth.

    Jim assumes how Google uses obervation to determine these things as a belief in Google’s part that people are lazy.

    I said I think that’s a bad assumption. But how Google uses observation is damn smart.

    “Peer production”, what I call *participation* is not only a force of nature – it is human nature. And Google can observe clicks into YouTube and links into YouTube. Or *any* independent service.

    Google relies on ‘peer production’. Their entire model would collapse otherwise. As each page goes up on the web, with more metadata, and inbound links to that page, their observational resources grow.

    Why re-post the comments you are providing here in some third-party service when a search engine, when another blogger, when a community like Digg or Netscape, or a tool like Technorati, provide avenues to it?

    Is Google the end, all be all? No. Will there one day be something better? Sure. And it is important to keep on the lookout for new ideas and ways of doing things. In doing so, we should not mis-characterize what is already here, and what has come before, in order to promote some new way of thinking.

    And you are certainly doing that by the way you are characterizing Google – whose entire business is built opon the participatory nature of the web and what Tim O’Reilly had once called, ‘the archetecture of participation’.

    Read about PageRank and then come back and try and say that Google thinks peer production isn’t a force a nature.

    Their entire business is bet that indeed it is.

  25. The comments in #3 are valid imho, but the example used lets down the point. Say for example the search string isn’t “gourmet coffee” (which indicates that you’re in open-minded ‘learning’ mode) but rather “weber q300 propane bbq”. This shows I know what I want (down to brand and model number) and essentially I’m looking for the right price from a good-enough vendor. Being able to cut through the flash front pages, spurious upsells, tortuous checkout processes and annoying post-purchase spamming are all “Good Things”. Sure, wallets have been tried many times but it could be that this attempt is one that’ll get some traction.

  26. Karl, my fault for not more clearly articulating — Google is indeed leveraging “participation,” but in a very mechanical way. To channel Umair, they only indirectly leverage the social and cultural dynamics that drive everything we do. When I link to something, it says a lot, but on the other hand, it is only a fragment of information. Here’s a partially useful analogy — a social anthropologist can learn a lot about family dynamics by watching families like a fly on the wall — but she can only learn so much without actually talking to the family and developing a personal relationship. MySpace and YouTube are built on direct personal connections, not just observed behavior.

    Is Google the end, all be all? No. Will there one day be something better? Sure.

    Google wouldn’t be Google with that kind of blase attitude — and no one can challenge Google with that attitude either.

  27. The ‘people are lazy’ comment was rather flippant developer-talk (“eh, people are lazy” sayeth the softwarer developer in me), but since people are discussing it, I should be more accurate.

    We obviously aren’t lazy overall, otherwise we wouldn’t have huge economies and all that. But we like it when technology comes along and makes things easier for us, particularly when we don’t have to do anything special for it.

    We also like to be involved in shaping the world and our surroundings…making a difference, being heard and respected.

  28. Google doesn’t simply looks at links. They have a whole lot more observational information at their disposal and it looks like this is an attempt to gather more as Jim noted.

    As for YouTube and MySpace…

    Google indexes them.

    It knows as much about the public personal connections being made on those sites as do their hosts.

    Every public personal connection made within MySpace is one that Google has access to. Every single one.

    Get this – MySpace and YouTube are built upon direct personal connections. You are right. And so is the entire web. And limiting your knowledge to particular communities on the web is well….

    Limiting.

    It indexes Publishing2.com.
    Until the day comes that sites start blocking Google from indexing them – and yes – *there* would be the weakness to their model – they have access to the collective participation of everyone, on every spiderable page on the web.

    A good question to ask is whether any single company should have that much information on anyone. Even if freely given.

    As for that quote you pulled – and the inference you attempted to make about me..

    Wow man. I’m not gonna bite. Good try though.

  29. Shoot man – in the time we’ve discussed this post, the googlebot has probably visited a couple times already.

    This page’s contents, inbound and outbound links, any scrap of metadata and text that can be analyzed for context, is now within Google’s data centers. These comments, and the urls commenter are leaving, may not be be indexed by Google to up other’s PageRanks, but are still rich in deriving relationship information and far more.

  30. In the new model, Google only makes money if people actually buy things. Right? So Google *is incentivized to return relevant results*. Microsoft is only incentivized to maintain its monopoly. I don’t see a parallel here.

    You might think Google is stupid for being so oriented toward automated solutions – but that doesn’t mean they’re working against the best interests of their users. Their economic model is set up in such a way that their interests are precisely aligned with those of users.

  31. Karl, just because they can see all of these connections, doesn’t mean they can fully understand them or interpret them — they are still trying to play the omniscient force that observes what you are doing and in a 1.0 patriarchal way delivers to you what the algorithms, in their wisdom, have deemed most relevant. YouTube is so powerful because it is people helping EACH OTHER determine what is relevant.

    And, yes, Google is indexing our conversation as we speak — but do you think IT understands that you annoyed me with the tone I inferred in your comment, which led me to somewhat unfairly pull and editorialize your quote, which in turn annoyed you? And if we make amends (which I’m doing now), do you think Google is following along?

    Human interactions are infinitely complex. Google is not god — as much as it may want to be. Why do you think economics as science has so much trouble predicting human behavior?

  32. Lukas, I didn’t say that Google is stupid — they are masters of their algorithm-driven domain, and are doing the best they can for their users. My point is that what they can do for their users is fundamentally limited because it is so purely technology driven — the new 2.0 paradigm is technology-enabled-peopled-driven (if that makes any sense).

  33. I’m aok with making amends, and recognizing that human interactions are infinitely complex. And yep Google isn’t God :)

    But you are conflating YouTube and MySpace with the web itself. And we, the people that are on it.

    You are absolutely right that YouTube is powerful, pricelessly for the reason you state.

    Google doesn’t have a community of participants per se.

    It is an avenue to *multiple* communities of participants.

    To put it another way, Google is a series of roads. And not places. And nor do I think they want to be thought of as a series of places.

    Their whole focus is to send you away from their service to someone else’s. And that’s their strength.

    A Perl motto comes to mind here: There is more than one way to do it.

  34. I thought the analysis was right on. This is a typical Google “dip your toe in the water” 0.5 pre-beta release effort. They are trying to leverage mostly their existing infrastructure and the appearance of a full new service, when in fact they have cobbled together a few existing bits with a few new bits to come up with a half-ass solution that I suppose they expect to succeed based on their dominant position in mindshare and the search audience. Of course, from a financial standpoint this might seem ingenius as the infrastructure to serve an infinite product catalog with an active community of reviewers (Amazon) or a similar e-bay type auction market (again with an active community), plus the transaction system, would be extremely expensive to develop and implement, not to mention a lengthy endeavor before any traction could be realized. This approach sort of lets them off easy to make a quick buck without a real investment of money, time or a human touch.

    The previous poster had a very good point–Google is more like a series of roads and not places, but the problem is there is no one to tell you which is the best road to take to get to the right place.

    I don’t think Google can really excel here without a real investment and effort to provide the full expereience and benefit of an Amazon or ebay. It’s like 80 percent of their other non-search offerings: it’s only half a commitment.

  35. [...] AdWords does not really care about users — “relevance” is only a variable in the equation to drive more clicks and thus more revenue. * we would think beta software is just for the testers and it’s dangerous. [...]

Add Your Comment

Subscribe

Receive new posts by email