June 28, 2006 9:01 PM PDT

Google Checkout: Amazon's worst nightmare

Posted by Rafe Needleman

On Thursday, Google is launching its buying service, Google Checkout (known previously by Google-watchers as Gbuy). It's going to make purchasing easier for Web users. You'll just enter your credit card billing and address information once, then on any commerce site you go to that's Checkout-enabled, you won't have to enter your data again.

This is not much of a competitor to eBay's PayPal, as some have predicted. Checkout is designed for serious merchants more than for individuals unloading old Star Trek snow globes on eBay. To be sure, the few merchants that are considering adding PayPal as a payment option (and that don't already have it) might divert their energies to signing up for Checkout, however there's no reason a commerce site couldn't offer both PayPal and Checkout if it desired.

Checkout is, however, a huge threat to Amazon. The biggest thing the online superstore has going for it is convenience. Once you buy an item on Amazon, buying the next one is a one-click affair. But go to another store, and you've got to enter your credit card info all over again. Amazon wins for convenience, and over time it's earned buyers' trust.

Will people trust Google? I bet they will. Google will push its high-end partners -- Buy.com, Starbucks, Timberland, and Levis are all part of the launch -- and the Google Checkout logo will appear on AdSense items from these and other vendors. This flag will take on a Visa-like pervasiveness. If Google is good enough at handling dispute resolution, people will come to trust it, they'll enjoy its convenience, and Amazon's value-add will be thwarted by ten thousand other stores all sharing one payment system.

Stores will pay Google a small fee for their transactions. This is a potentially gigantic revenue stream for Google, but more importantly, if successful, no other online company will end up knowing as much about the spending behaviors of online consumers as Google. This data is no doubt going to go towards making online ads even more targeted and effective (and thus possibly more expensive), which will also add handsomely to Google's income. For this reason, I think the Checkout fee structure is backwards: Google should be paying its merchants for the privilege of capturing all their transaction data, rather than charging them for each transaction.

Originally posted at ComingSoon

Rafe Needleman writes about start-ups, new technologies, and Web 2.0 products, as editor of CNET's Webware. E-mail Rafe.

Tags:: Web 2.0,; Commerce,; Buzz

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both amazon and paypal have been compromized

I have had both 1 click and paypal accounts compromized more than 2 times. I no longer store credit card numbers at ANY site due to the hassle of changing credit card numbers.

A word to the wise should be sufficient.

by jbuttner (See profile) - July 4, 2006 9:34 AM PDT

Hard to judge this new offering...

...when so few retailers have actually signed up for the service. No matter how GOOD some people THINK this thing could be, Google has to do a better job of getting e-tailers on board BEFORE such a service is released into the wild. Buy.com so far is the only e-tailer I've managed to score a Checkout icon on. There may be others, but to date I (and Google, as I've used it) haven't come across them.

Kind of like going off and building a new operating system, and then forgetting to let the applications developers in on the secret. What good is the new system if there's nothing to use it with?

Amazon's worst nightmare? Yesterday I was given the impression that Google Checkout was Yahoo! Shopping, PayPal and eBay's worst nightmare. Well, with nightmares like this, I should sleep so good...

by make_or_break (See profile) - June 30, 2006 5:12 PM PDT

Not a threat to Amazon

When I shop on-line, the biggest threat to other merchants is themselves. I buy a lot from Amazon. But it's the price that counts, so I still shop around. Let's face it. Froogle is not very good. Many check out systems are not very good. But filling in the forms is not the problem. I have software to do that for me.

The problem with Froogle is that it does not give a bottom line price. The same is true with Yahoo shops. I don't want to go to the check out process to first find out what I'm going to pay.

Amazon is convenient because I know what I'm getting, and customer service is still good. (Used to be excellent, but is still well above average) The price is good, but sometimes it still pays to shop around.

The advantage I see with this new service is that I won't have to give my email address and credit card number out. That could save me a lot of spam headaches.

Ever since congress made certain spam legal, businesses all over the place have taken it upon themselves to spam me. If I didn't sign up for a mailing list, it's still spam, even if the government says it's legal.

So I'll probably sign up for this. It won't change my shopping habits, for now, but if I do end up at a store where I haven't done business before, I might as well use this.

by wresnick (See profile) - June 30, 2006 1:10 PM PDT

ahhh - froogle

I use froogle daily (or whenever I research a purchase, online or otherwise) as just one of those "good deal" finders, and one of those reasources of finding who the hell sells that "item" that I wanna' buy. And in response to the previous posters comment on froogle's failure. I would not see it as a failure by any means, in fact it only brings things into clearer perspective. They're already running system (froogle) only makes this new "trick" that much more useful, now instead of clicking a link and sending you to an affiliate or competitors site they can allow you to make that purchase directly through them, and there by collecting data or making a few cents. And really, when it comes down to it, people trust google. I do (maybe more then I should, but). And everything that they have produced, in my opinion, has been of the highest quality.

by dylanjameswagner (See profile) - June 30, 2006 3:49 AM PDT

Resolution Dispute Success is Key to Google

You are very correct to point out that a main pivotal point to the success of Google's Checkout service will be in how well it deals with resolving disputes. In many instances, I was totally disapointed with Paypal's appeal and resolution procedure.

Paypal would lose documents of ongoing appeals, not have a single translator for some foreign countries; telling you to fax them documents when they would deny ever receiving them, etc.

In addition, multiple Paypal agents would be assigned to your resolution dispute making it necessary to re-explain over, and over, to them each time you called. In fact, Paypal often would never bother reading your emails forcing you to call and waiting months and months just for a single answer from them.

In most instances, you would just give-up and then hate Paypal foever. Hopefully, Google will do a much better job and I look forward in doing business with them!

by desertcities (See profile) - June 30, 2006 2:04 AM PDT

Google should do price search instead

I buy stuff off the internet from stores with the best price and the best reputation on customer services, not because I can save 15 seconds inputting a credit card number. Saving a few click at Amazon was never an incentive for to me to buy from there unless they have the best price. If merchants have to pay for Google's service, it'd be harder for them to have the best price over other sites that charges credit card directly, so where's the advantage?
Now if Google really want to utilize what they do best, they should get into the business of best price searching using their search technology experience (similar to price comparison sites like pricegrabber or what available on C|net), and then a Google Checkout service would make sense. A customer can search for the best price for a particular item from various on-line vendors and then pay with Google Checkout without having to go through the CC number punching deal. Then vendors would much likely to pay for the Google service and get then pay to get the ranking in their searches as well, more money for Google. Hey, I should sell that idea to Larry and Sergey. Hey, you guys out there??

by deecee (See profile) - June 29, 2006 3:54 PM PDT

10 out of 10 users found this comment helpful | 4 comments

I use Virtual Numbers

Microsoft has tried this with their Passport initiative and I don't see why Google will be successful with this. Also why would stores want to pay Google when they can have their own checkout solutions.

Also I use virtual credit card numbers from Citibank so that the Seller cannot store my credit card number on their site, so why would anybody want to have their credit card numbers stored on Google's site. It is not like Google is HACKER proof.

Finally CNET should stop commenting on how huge or not huge the opportunity is in terms of $ and focus on the quality of products/solutions. I come to CNET to see how good products are, and for investment related advise I would rather read articles on Yahoo Finance..

by freests (See profile) - June 29, 2006 3:22 PM PDT

10 out of 10 users found this comment helpful | 2 comments

Isn't this what microsoft tried to do for years?

Isn't this exactly what passport was for. You have a single login to sign in on multiple sites, and that stored your cc info for you. Seriously, there's nothing new here that hasn't been tried all ready.

by MarioB101 (See profile) - June 29, 2006 2:37 PM PDT

0 out of 5 users found this comment helpful | 1 comment

Not so fast

I bought on Amazon once, selected "no" on remember my credit card, they recorded it anyway. Never went back again over there.

How do you know people will NOT try to avoid those sites that participates in invading your privacy?

Google Checkout: Amazon's worst nightmare

Web 2.0,

Commerce,

Buzz

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