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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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ANALYSIS Google turns search into sales while Instagram turns posts into purchases

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ANALYSIS Google turns search into sales while Instagram turns posts into purchases
ANALYSIS Google turns search into sales while Instagram turns posts into purchases

Retail is changing rapidly, with the traditional platforms – and even some disruptors – coming under pressure from new sources of sales. This week alone, Google and Instagram have joined eBay in turning retail upside down. And it is all driven by mobile.

First of all Google has introduced in the US Google Shopping Action Programme which will allow searches to become sales. Retailers including Costco, Home Depot, Target, Ulta Beauty, Walmart and 1-800-Flowers are now able to appear in search results and be shopped direct from Google, sharing a cut of the proceeds with the search giant.

The move has been driven by an 85% rise in searches on Google via mobile that start with the phrase “Where can I buy…” and has already seen the average size of a customer’s shopping basket grow by 30% after joining the Shopping Actions programme – in fact, Ulta claims that it saw average order values increase by 35%. Target, which has been live for six months, says its Google Express shopping baskets increased nearly 20%, after signing up to the programme.

The move certainly changes the landscape for retailers, as it not only helps them tap into mobile shoppers at the point of search, but also looks to be a direct competition to Amazon and eBay – effectively making Google a marketplace-cum-search engine all in one.

The move also helps brands and retailers tab into Google Home and Google Shopping both on smartphones and on voice-assistant devices, giving Amazon and its Alexa a proper run for its money.

Commenting on the Google move, Bryant Goodall, digital marketing manager at Kibo says: “Google has been pushing for the “one answer to rule them all” strategy for some time and it’s more likely an echo of the how Amazon does it. Through different endorsement and engagement deals, a retailer can “persuade” Amazon to be that one answer for Alexa, and Google is staging it the same way with a twist: they’re leveraging their power to become an ally for retailers who are feeling the push from Amazon (Target, Walmart and others). With the integration of Google Express, Google Assistant, and Google Search, Google and others now have an environment similar to the Amazon ecosystem, with a likelihood of expansion and an opportunity to seize shoppers who are exiting that ecosystem for Amazon. The symbiosis of Amazon and Google may be changing right before our eyes.”

Meanwhile, Instagram has also launched a shopping service in the UK this week, allowing retailers and brands to sell from their posts on the social media site.

Instagram shopping was launched in the US last year and has been trialled in the UK by, among others, M&S.

Erin Roy, head of media and digital marketing at M&S, tells City AM today: "Instagram shopping offers us the opportunity to realise the huge potential of our 760,000 followers. Instagram has always been a great platform through which to showcase our products and engage with customers. Shoppable posts take this to a whole new level."

“It’s no surprise to see Instagram expand their shopping service in the UK,” says Hugh Fletcher, Global Head of Consultancy and Innovation, Salmon. “Firstly, it is simply a reaction to consumers’ ever-changing shopping traits which continue to shift to mobile and online. And for brands it’s an opportunity to secure a larger slice of the competitive retail market. Mobile sales are now a significant source of growth and this will enable retailers to provide tailored deals directly to the shopper. It will also naturally influence the market during retail peaks, as consumers use social media to search for the latest trends and products. Our Black Friday research last year predicted that November would be the first £10 billion mobile month, but the figure may have been much higher if shoppers could purchase directly from social.”

The moves by Google and Instagram follow hot on the heels of eBay rolling out ‘shop the look’ offerings via media outlets Mashable and Time Inc late last year and earlier this month, respectively. Taken together, these launches all mark a massive shift in how retailers and brands are looking to connect to their markets.

The idea of using marketplaces to reach shoppers has been growing over the past year – not least because that is where 41% of shoppers are. But, very rapidly in 2018, we have seen this movement morph into retailers, brands and marketplaces themselves all looking at how to sell through the platforms that users are on – and this is increasingly moving away from retail websites.

The shift is being driven by the need for as frictionless a consumer journey as possible, with all these new offerings removing at least one step from the purchase funnel: Google taking shoppers from search to buy, removing the click on to a retailer; Instagram taking the social media user straight to buy, again by-passing the retail site stage; and eBay acting as the seller and fulfilment in the background for Mashable and Time Inc.

It is early days, but already it looks like retail is undergoing a seismic shift – and right now even Amazon appears to not be part of this change, focussing instead on pure dominance of what might soon be an old market.

That said, one swallow does not a summer make – and the shift in thinking as to what constitutes a retail platform does come with caveats. As Salmon’s Fletcher puts it: “Importantly, retailers mustn’t ignore the supply chain challenges as they link their offline, online and social channels together. Back-end processes will have to be prepared for the increased level of purchases made via social media, and ensure that stock levels and estimated delivery times remain up-to-date. Without a fluid retail experience, shoppers will be left frustrated and may abandon a brand as a result. However, brands that can successfully build a robust, personal and immediate online service will be able to turn shoppers into long-term customers.”

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