How Google quietly became India's third-biggest e-commerce player

Google taps online market for ad revenue: joins hands with top brands, helps over 100,000 new sellers to set up online shops, while Flipkart and Amazon fought new FDI norms

During the festive season in December last year, when country’s two biggest online marketplaces, Amazon India and Flipkart, scrambled to save their businesses from the onslaught of the new foreign direct investment (FDI) norms in e-commerce, search giant Google quietly went on expanding its merchant base through its platform Google Shopping. 

Following a “true” marketplace model of e-commerce, experts believe, helped Google virtually escape unscathed from the changes in FDI in e-commerce norms. While Amazon India and Flipkart were revamping their business models over the past two months, Google utilised that time to bolster its e-commerce business. This will help the search giant make massive advertisement revenue. 

From adding and tying up some of the biggest brands in the country to assisting more than 100,000 new sellers to set online shops, the Mountain View-headquartered company is slowly becoming the third biggest e-commerce player in the country. 

This, however, might not be the search giant’s ultimate aim. According to experts, for Google, a good e-commerce play is more about ensuring getting the advertisement revenue back in a major way. The search giant did not comment on the story. 

An ideal marketplace, but a tough sale

Though Google unveiled its e-commerce plans with much pomp and show, unlike its competitors, it did not go out and about promoting the marketplace business after the initial hurrah.

 The company is an ideal online marketplace. All it does is list. And that’s where it is important to pay attention to the detail. Technically, it is not Google that fulfils an order. For any purchase, it directs customers to the merchant’s website where the seller completes the transaction. 

“I thought they would leverage Google Pay here but that is not happening either,” says a senior executive at one largest e-commerce firms in the country, who is closely monitoring Google’s moves. 

According to a former senior executive at Google India, the company does not plan to do fulfilment in near future at least. “They are aware that not doing may result in a broken customer experience, if the seller is not professional,” he said. Google had in 2014 and 2015 tried its hand at e-commerce in India and started Great Online Shopping Festival. But India wasn’t ready for e-commerce then.

With Amazon and Flipkart having raised standards of services, experts believe it would be difficult for Google to match that. 

Search and advertisement revenue, the real currency

“Not e-commerce but Google’s bread and butter: search,” says a Mumbai-based venture capital investor whose firm has pumped capital into several e-commerce companies. 

Google has been losing out on product searches to Amazon in the US and Amazon and Flipkart in India. “People are slowly turning to search for products on apps rather than on search engines. This is a risk to Google’s inherent business model and alarm bells have been ringing for a while,” says one of the people quoted above.
 

According to experts, the search traffic does spike during big sale days but through the year it stays flat and that is worrying for Google. To get massive traffic back on the platform, Google is relying on its ‘Next Billion Users’ initiative. 

“They firmly believe that the next 400 million internet users coming online would go through the same progression of starting with Google search. Low end phones still have finite memory and using Google in the easiest thanks to its vernacular, voice command based options. They would be the ones to use Google for shopping as well. They might end up buying from an Amazon, but they will still use Google to reach there,” added the ex-Googler.    

Also over the next few years, Google would get a huge chunk of offline sellers online. Thanks to the rich data bank they would be able to help offline retailers make periodic sales to the same customers as well as help them get new customers. This would help Google make massive advertisement revenue.