Google Checkout - Finally Something Interesting : The Commerce360 Blog

Google Checkout is amazing for two simple reasons. First, it's incredibly easy to sign up and to use in a real live store (I tried it at Levis). Second, in a full 10 years of the ecommerce phenomenon nobody else has managed to get a universal wallet right.

On the first point, I give them credit. I've not been particularly impressed with most of the Google add-on apps. To me they've all been a transparent attempt to create stickiness for a site (and business model) that had very little at the time of their IPO. I don't particularly think minimalist software works as well as a minimalist UI. And far too many of these services have rolled out only to languish without significant (although much needed) improvements for long long periods of time.

But at the same time the company has been spitting out services (email, IM, blogging, etc.) and bribes (picassa, earth, analytics) they've also been creating a monster 'game over strategy' that must have lots of monopolists in Redmond turning green with envy.

I find the fact that despite many attempts a universal wallet hasn't been done successfully thus far fascinating. Microsoft tried. Bill Gross tried. The credit card companies tried. Even the spyware kings at Gator (now Claria) tried. I'm sure there were dozens more.

But nobody ever made it stick. And the result is we all have 20-200 password accounts at retailers across the internet, have to retype our address and credit card numbers endlessly, and favor places where we already have accounts (like Amazon) over other smaller retailers because it's just more convenient to shop using an existing account than to open an new one for every purchase.

You only have to try Google Checkout once to know this is how online commerce should work. No account sign up (at the merchant), no credit card re-entry, and you can even make a purchase and prevent the seller from getting your address (bye-bye lots of spam and 'special offers'). So the new questions become: A) can they convince enough merchants and consumers to participate, and B) what kind of evil is Google going to with your purchase history and the power to 'direct' massive percentages of the online transaction volume.

The answer to A depends a little on the technical difficulty of the integration, which I haven't read any comments on yet. (Update: Here is one experience with very basic integration.) Looking at how it works on the sample sites and knowing that the millions of online retailers out there have millions of different systems and many of these probably aren't easy to modify due to complexity or the fact that the guy who wrote it is long long gone, I think this isn't a slam dunk - but assume they'll build steadily, leveraging the Adwords relationship (and economics) and the fear that will soon set in that adwords without the little cart will either loose clicks or ranking.

On the consumer side, they're going to need those merchants pushing it, plus a long sustained campaign of both word-of-mouth and probably even actual advertising. Despite inside-the-blogosphere fawning, most Google add-ons have faired rather poorly.

The potential evil is the palpable concern across internet today. (Update: See Dave Winer on this issue.) Will they use this to drive to a CPA (revenue share) model for top segments in adwords? (Om thinks so) Will they use the aggregated purchase data to choose markets to go into with Google-direct selling vehicles? Will they punish non-checkout advertisers in ways beyond withholding the Google-checkout icon? And of course the big one, will they just make so much damn money getting paid for the advertisement and getting a % of the transaction that the rest of us have to hate them, at least a little, because they're winning so damn big?

With Google Checkout they have a system where they make money off the front (advertising) and back (transactions) of the ecommerce process. They’ll ‘own’ the masses of sellers (advertisers) and buyers (checkout’ers). They clean up and leave the messy work of selecting inventory, persuading visitors to buy, shipping and providing customer service to others. Nice work if you can get it.

Update: Some good thoughts on GC from Traffick. And BusinessWeek looks at Google's string of non-hits.

Comments

Re: HTML. You're 'game over strategy' link is dead.

Re: hating them. I think there is already a large portion of us that already hate them for much better reasons (secrecy, bungling of click fraud, failure to respond powerfully enough to link farm spam, etc) ;-)

Re: GC. While the experience may be better than any others, I still fail to see how this can be realistic. I've heard a lot about the "e-wallet" over the years and I keep thinking "If that was the way it had to be, we'd all be banking at one bank".

There's no way in hell I want Google to know about everything I purchase. What's to stop them from misusing that information? And what's my recourse for when I decide that they are misusing it (b/c they will). If all they are going to do with it is target ads to me more "effectively", then no thanks. My life consists of more than being sold to.

What is the obsession with SSO schemes, anyway? They are almost entirely mitigated by a good client password locker program (either in the browser or on the desktop) and serve only to create a middleman where there formerly were none. Everywhere you look on the Web, greedy middlemen are getting the hammer. Why insert them between me and my behavior? What's the benefit for me other than saving 20 seconds filling out a form? (which, by the way, Firefox does almost entirely for me anyway)

What I don't see anyone talking about is that this is a pretty bold move for Google in the war against click fraud. Observe: you click on an ad after a Google search and then buy something on the site with your GC account. Definitely not click fraud and easy to grep out of the logs over there on that big ol' GFS cluster. So that event can be factored out of the fraud calculations, making the job of determining fraudulent clicks easier in proportion to the number of transactions brokered by GC. Plus, they're making money on both ends of the tranny. That's just ingeniousical.

P.S. I am fully aware of the percieved antagonistism involved in posting this rant on the blog of a company who's in the ad game. I come in peace. Take me to your leader :)

Posted by: Toby | June 30, 2006 9:08 PM

First up Craig this is a really good article. Got the link from Redeye VC, Josh Kopelman's blog.

RE: Toby and Google watching what you buy.

Surely then you should be concerned with what the major credit card and banks store. They know a lot more about your spending habits than Google ever will, and there is nothing to suggest they won'tuse it in a similar way in the future. Your concerns echo that of peoples when gmail was first released. But actually people have come to like contextual adds based upon the contents of their email; that or they just ignore it.

If an algorithum is silently checking where you've been shopping and providing adds on that basis I don't think you have much to worry about. The world is going that way, get used it it I'd say.

Posted by: danielbower | July 3, 2006 6:15 AM

The difference between the credit card companies and google is all the CC's can do is stuff my inserts in my bill. Google can change what I see both in terms of targeting me and in terms of NOT providing me the same organic or other results they would have before. If I believed that the organic results wouldn't change, I wouldn't really care what Google did. But I think financial pressures will continuously eat away at whatever integrity the organic results had, in terms of quality and visibility. In terms of my own 'lifetime contextual ad stream' I'm great with it - bring it on.

Posted by: Craig Danuloff | July 3, 2006 9:40 AM

actually, i think you're overlooking PayPal here as a succesful 'universal wallet' that has won significant market adoption .

altho i'd say they need to do work to improve the checkout UI experience, in the past ~5 years they've gotten >70-80M users to signup, and there's probably >1M online merchants (sorry not sure of that #) accepting PayPal as a payment option, including a growing # of larger merchants like Starbucks, Apple (iTunes), and several electronic retailers.

not completely ubiquitous, but if you're suggesting Google Checkout is on this path, PayPal is at least 4-5 years ahead, and has integrated payment from your bank account as an additional option to credit cards & PayPal itself.

that said, i'd agree Google Checkout is a strong entry solution that should do well given Google's brand & reach... but the more interesting story is around how Google is using its leverage as an advertiser to gain market share & merchant adoption, not to mention the potential for introducing CPA-based costing for ads as an additional incentive.

(full disclosure: i used to work for PayPal).

- dave mcclure

Posted by: Dave | July 3, 2006 11:45 AM

Dave: Yes Paypal deserved more mention, and is clearly a success. But as you point out, it's more as a pier-to-pier payment solution, and is not at all universal as a merchant solution. Also, when merchants do use it having the shopper even temporarily 'leave' to go to Paypal to pay is a non-optimal experience. I"m sure the GC will goose them to improve things - competition is always a good thing.

Posted by: Craig Danuloff | July 3, 2006 1:19 PM

Unfortunately it seemed at first look that GCheckout is US-only, not available in other countries.

Posted by: Jüri Kaljundi | July 5, 2006 3:46 AM