Amazon is so dominant in the U.S. e-commerce market that when consumers want to find a product, half of them start on the retailer’s website. For Google, the world’s leading search engine, that’s a frustrating fact, especially given its attempts to break into e-commerce. The Google Shopping service has been growing quickly in the U.S. and Europe, where Amazon has less penetration, but it still makes up a small portion of e-commerce sales.
The next big opportunity in e-commerce, as many companies are now coming to realize, is in Southeast Asia. The region was specifically singled out this week when Google announced it was investing $550 million in China’s JD.com for a 1 percent stake. Google hopes teaming up with JD will help it improve e-commerce infrastructure for new markets and expand its global reach. As Amazon and Walmart move to expand in Asia, Google wants to make sure it doesn’t miss the new e-commerce opportunities in these burgeoning consumer markets the way it once did in the U.S.
Amazon’s e-commerce dominance in the U.S. has already been a wakeup call to retailers, and the company’s Whole Foods acquisition now has the grocery industry on edge. This has worked in Google’s favor. It gets to act as an impartial tech company helping give retailers a technological upgrade in exchange for a cut of the revenue it helps generate through its search results.
“We have taken a fundamentally different approach from the likes of Amazon because we see ourselves as an enabler of retail,” Google president of retail Daniel Alegre told Reuters in March.
Google also announced this month a partnership with French grocer Carrefour. This will allow consumers in France to order groceries on Google Shopping and by voice through Google Assistant. Carrefour has also notably been expanding in Asia; mostly in China.
Like its competitors, Google wants a slice of the growing e-commerce pie in Asia. The Google strategy of acting as a partner and not a competitor could be beneficial to many new local retailers, though. Amazon, Alibaba and Walmart have all made acquisitions or strategic moves that make them direct competitors in the region. Google wants to be the friendly tech giant.
There is some danger for Google in partnering with JD.com. Other local retailers could see that as a threat, but Google may merely be looking to create opportunities in markets that aren’t yet mature. With just a 1 percent stake in JD.com, the search giant has plenty of incentives to partner with or invest in other retailers and startups.
The expansion of Google Shopping can only help startups looking to expand themselves into new markets in Asia. Whether it’s through more competition with JD.com entering new markets or through a variety of Google partnerships in the region, it gives startups more opportunities to reach new consumers.
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