Amazon and Google Go Head to Head Over Online Shopping Space

source: http://www.flickr.com/photos/wonderlane/

Many may not think of Amazon.com (NASDAQ:AMZN) and Google (NASDAQ:GOOG) as direct rivals, but the two Internet giants indeed compete fiercely. Google doesn’t have goods on an online marketplace to sell, but it does have “product-listing ads” to market, and the company wants consumers to visit Google.com to for their shopping inquiries, rather than resorting to Amazon.

That’s why Google has remodeled its search page to make Google the preferred entry point for Internet shopping, ahead of Amazon. According to the Wall Street Journal, Google now allows retailers to post pictures, descriptions, and prices of their products at the top of search results, and research shows that consumers click on product ads 34 percent more freqently than regular text ads, the old plugs Google used to work with. Google’s page now looks a lot more similar to what Amazon shoppers see when they visit the e-commerce site, but retailers are reportedly happy with the changes, as Wal-Mart Stores (NYSE:WMT), eBay (NASDAQ:EBAY), and Target (NYSE:TGT) are all now investing in the new advertising space.

The new changes reflect significant progress for Google, because the search giant needs consumers to keep visiting its search page so Google can show them ads, and the support of high-profile retailers only helps Google’s cause. According to the Journal, comScore expects U.S. e-commerce to rise 14 percent around $210 billion this year, and because ad revenue is a significant profit driver for Google, it is now more important than ever that Google continues attracting the attention of shoppers and keeps its ad revenue opportunities open.

But despite its recent progress, the Journal highlights that Google still has a far way to go, and it doesn’t help that Amazon’s presence in the Internet world is only growing. Analytics and software firm SDL recently asked people the top three places they plan to research gift purchases this holiday season, and while “online search” registered 45 percent, that figure is down from 49 percent a year earlier, and the option for Amazon has jumped from 31 percent to 37 percent.

Thus, it is evident that the Amazon effect is growing; the question now remains: can Google keep up? A partner from Andreessen Horowitz says Amazon’s shopping experience is better Google’s, while ChannelAdvisor contends that its clients’ sales via Amazon increased about 25 percent in the third quarter, compared with a year earlier. These insights don’t bode well for Google, but at least the search giant is making progress and putting up a good fight. According to the Journal, Google hasn’t released performance figures for its new product-listing ads, but chief business officer Nikesh Arora maintained in October that the ads were getting “great traction” both on computers and phones. Amazon might be improving, but so too is Google, and the latter is doing its best to stave off increased competition while it can.

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