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AH Primetime: Buy Button Poses Challenges For Google & Others

June 17, 2015 - Written By Cory McNutt

Years ago, consumers would very often do their ‘shopping’ online – but they were not really ‘shopping’ in the normal sense…what they did was research before going into a bricks and mortar store to make a purchase.  They knew which retailers carried the merchandise and which ones were the cheapest before they even set foot in the store.  It was a great gasoline and time saver, as well as a research tool.  My, how things have changed in the past ten years…now consumers can go directly to a retailer’s website, for instance, Best Buy, add items to their imaginary shopping cart and eventually ‘check-out’ online.  The retailer saves all of the pertinent information (if you create an online profile) and next time you arrive at their website and sign-in (if the cookie is gone), it will even personally welcome you back!

Buying directly from the retailer is a fairly easy process to setup – after all, you are tapping directly into the inventory of the seller, they are collecting the payment and shipping the merchandise.  It is a one-on-one sort of transaction between yourself and the merchant – even in the case of Amazon. As they are in control of everything, even though there may be multiple vendors they deal with.  But what is happening now, is that third parties are getting involved too. If you are on Google, Pinterest, Twitter or Facebook and reading about an item – They want to add a ‘buy’ button so you will make the purchase right then and there, on their website and no longer via the actual retailer.

We will look more at Google than the other companies, but in the last eleven months all four of the companies mentioned have announced they will test or introduce some version of a ‘Buy’ button.  While Facebook and Twitter have already begun testing, little progress has been made. This is because there are so many hurdles from the consumer side and the company’s side.  These companies are huge and just the logistics of integrating payment and inventory systems is daunting enough, let alone allowing their customers to ‘shop’ elsewhere and not be directly in the store.  Big stores like Macy’s depend on multiple purchases from a browsing customer…the thought of those customers browsing on the web, terrifies them, as they worry they will become nothing more than a warehouse.  On the other hand, you have to convince the buyers to get used to and trust buying merchandise from the third party’s website.  Razvan Roman, CEO of a software startup called TwoTap (that helps apps integrate buying features) said, “Shoppers are increasingly spending more time in third-party apps, but the problem is a lot of these apps are saying, ‘We have millions of users, so we can just put in a payment processor and people will just buy, right?’  It’s just not that simple.”

Google wants to add a ‘Buy’ button to its search engines and it makes perfect sense as the companies are already advertising through Google.  Mobile commerce grew three times as fast as commerce on a laptop. Clicking on an ad is lower on phones than laptops, but if they can integrate a ‘Buy’ button into the ad, the relationship could change dramatically.  Google wants to compete with Amazon for sales and advertising – with Google, it always comes back to advertising and engaging the customer.  A research study from comScore shows that nearly 60-percent of online browsing is on tablets and smartphones, however, only about 15-percent of e-commerce sales takes place on such devices.

Google has to gain the trust of customers and ensure them that what they see, is what they will get. Which goes back to inventory.  The retailer’s product catalogs, order management and payment systems must be synced with the Google ad depicting that merchandise.  The retailer needs to know that they will receive the order, so they can process it in a timely manner.  The image in a Google ad must match what the customer is actually getting since the ‘Buy’ button is not a part of the retailer’s system, but Google’s.  Selling only one item online often costs the retailer a lot more than multiple purchases, which is especially easy to do when the customer is physically in your store.

There are apps, for instance, that allow women to discover new clothing lines and a combination of outfits that would be ideal for a ‘Buy’ button, but these smaller companies, while performing a great shopping service, are less keen to touch on selling at this point. CEO Jess Lee of Polyvore believes that a large company such as Google or Facebook, will have to push retailers to design an integrated system to work with third party apps. Then the small companies will be able to tap into the retailer’s established system.  Lee said in an email discussing Google, “[T]hey could issue a decree saying that retailers who adopt the buy button will be weighted higher in the ads ranking algorithm.  Because they’re such a big important source of traffic, many retailers would opt in. Once enough people opt in, everyone will have to.”