Google’s GBuy to Give eBay’s PayPal Run for the Money
By George Anderson
PayPal watch out. There’s a new online payment system in town and it plans on capturing the data from internet transactions to develop more precise target marketing to consumers using the service.
The new service is GBuy from Google and, according to at least one analyst, Jordan Rohan of RBC Capital Markets, this aspect, “If harnessed (correctly)… could be revolutionary.”
Some merchants may be concerned about the data captured because of the fear it may drive up the cost of sponsored links. Because Google’s rankings are determined by click-through rates, those using GBuy may wind up paying more to sponsor links in the future.
Third-party sites offering GBuy will be designated as a “trusted GBuy merchant.” When consumers decide to make a purchase using the system, they will leave the particular merchant’s site to complete the buy, reports Forbes.com.
According to RBC’s Rohan, consumers may feel more secure knowing merchants are using a Google system and in turn complete purchases where shopping carts may have previously been abandoned.
The company with the most to lose from GBuy is eBay.
“Short term, GBuy is more negative for eBay than it is positive for Google,” according to Mr. Rohan. “Longer-term, it could be a game-changer.”
Google expects to launch GBuy on June 28.
Moderator’s Comment: What impact will Google’s GBuy system have on the online payment market? Is there a real opportunity for another system to give
PayPal a run for its money? – George Anderson – Moderator
It will probably have about as much impact as those non-Windows computer operating systems have. I can’t even remember their names. The thing with PayPal is just about everyone I deal with has it. With everyone in sync with each other using one system, it will be difficult to get people to suddenly switch and have two.
GBuy is much ado about nothing, like MSN’s perennially “nearly completed” search engine for sponsored links. PayPal is universally reviled (do a search for “paypalsucks” and check out their links). We stopped doing bidness with them over a year ago for a host of transgressions, and haven’t experienced any sales repercussions.
It’s extremely simple for retail websites to secure their customers’ transactions. Plus, it’s a distinct negative to allow customers to be switched to alternate paysites (like PayPal), in case they want to retreat and ask questions or change their orders. It’s always negative to switch customers away from your website.
I would like to support Raj and Ed in challenging the points above based on a few observations.
A few weeks ago, I had lunch with a few of Google’s lead folks and subsequently sat in on a class at Northwestern University where they presented. In the 3 hours I spent with them, I took home one very clear point: Google’s goal is to bring people the information that they need in exactly the manner that they wish. They meet those needs first, via a relentless focus on consumer insights, and figure out how to make money later. Understanding this and their true passion and commitment to it, I don’t think we should rule this play out quite yet.
The key point here is that Google has earned what so many brands desire because of their company mission: TRUST. They did it slowly and aim to continue to do so with new and better services. As the year unfolds and some of the other plays that they are working on come to light, I personally feel that they could become a force to be reckoned with.
As a consumer of many of Google’s free services, I for one would allow them into ANY of my data because they have shown me through experience that they: (1) know me; (2) care about my needs; (3) listen to my feedback; and (4) do not abuse my trust. I can’t say that about PayPal.
As a final thought, I would offer that they are likely trying to find a way to apply GBuy to some of the services attached to their new Google Toolbar and ecommerce searches (it is currently in beta version and available to download). Via the Bibirmer Compare Prices function, you can search for any product and every single price, applicable sales tax by your zip code and shipping cost appears with clearly listed variances. I saw HDTV variances of up to $1,000 using the tool for one model! Having “My Gbuy” to click and buy that lowest price sure seems to create the most simple, instantaneous ecommerce transaction out there.
Isn’t competition good for everyone? I would think that GBuy will eventually make internet shopping cheaper for everyone.
Right now PayPal is the only game in town and you can either agree to their terms or get lost. I welcome any service that will inject more competition in the process and give the consumer more choices. Isn’t that what the internet is all about? “More Choices”! More choices equal better service and lower prices. Give us more Google!
I am a little surprised by some of the comments. A few years ago, when Google was still in the infancy, no one would have believed that Yahoo search engine would take a back seat to an entirely new search service. New business model could change the name of the game. I am happy with PayPal and I also think eBay has done a good job managing it, however, I will not write GBuy off until we learn a little more about their business model.
What’s in a name? In the case of Google, their name has come to mean tracking what you look at. That might be OK when it comes to web sites, but when you start to mess with how people spend their money, it’s a whole different thing.
You have to look at the objective of Google in creating this service…it’s not to serve customers and make financial transaction easier. PayPal has already done that and is doing it quite well. In fact, PayPal has grown to be dominant because they solve a problem and meet the need for an efficient, secure, and private method to transfer funds over the Internet.
Google isn’t solving a problem, but instead seems focused on monetizing the customer spending information that they can get through GBuy. Their ulterior motive is obvious, so unless there is a specific and meaningful advantage for customers to cause them to choose GBuy, I would expect a fair amount of resistance.
My one objection to Paypal – and it may or may not be their fault – is the amount of Spam I get. Numerous fake messages every week trying to persuade me to “confirm” my details. With GBuy starting out by saying that they want to use customer info for target marketing and try to sell us more and more, I can see no reason to switch at least until they’ve proved themselves. I also think David’s point is important. Both buyer and seller need to be using the same system and that may take quite a bit of time.
I’m with Ken – if Google doesn’t look at customers, and address a need or solve a problem, then as a second try PayPal, GBuy will never be more than an also ran.
It’s an attractive idea for Google, to see exactly what customers spend on, and mine that for marketing opportunities. But unless the customers see a benefit, there’s no reason to switch. And customers are getting more and more concerned about the privacy of their personal data – so the benefit to the customer would have to be huge.
I’d be surprised to hear that Google got the idea from comments coming back from ecommerce users. PayPal may have some issues, and Microsoft Passport is a train wreck, but GBuy seems to be a solution looking for a problem.
GBuy will not have the impact that PayPal has had. First, it is not attached to eBay’s auction system. This has given PayPal credibility and demand. Secondly, it doesn’t have presence. No matter how big Google is, it will always be second to market here, since PayPal was first. This speaks to an incredible marketing advantage as well as top of mind awareness. This translates into higher market share, usage and of course dollars. GBuy can seek out other partners and other locales, however eBay will continue to pursue the same growth strategy. It will be very difficult, and expensive for GBuy to eclipse the PayPal lead.
A great book on this subject, The PayPal Wars, by Eric M. Jackson, makes it clear just how tough it was to create PayPal and how hard it is to sustain it. Given the government hostility (instigated by the banking industry) combined with the fraud problems, it’s amazing that PayPal survived and grew. Google has no easy task, regardless of its enormous resources.