Google Plans to Make YouTube a Major Shopping Destination

Noble Horvath

(Bloomberg) — Every toy, gadget and good you see on YouTube could soon be for sale online — not on Amazon, but right on YouTube itself. © Bloomberg The logo for YouTube Inc. is displayed on a laptop computer in an arranged photograph taken in the Brooklyn borough of New […]

(Bloomberg) — Every toy, gadget and good you see on YouTube could soon be for sale online — not on Amazon, but right on YouTube itself.



a close up of a person using a laptop computer: The logo for YouTube Inc. is displayed on a laptop computer in an arranged photograph taken in the Brooklyn borough of New York, U.S., on Sunday, May 10, 2020. The video arm of Alphabet Inc.'s Google is offering new tools and audience statistics specifically for advertising on TV - screen space where YouTube has trailed cable channel.


© Bloomberg
The logo for YouTube Inc. is displayed on a laptop computer in an arranged photograph taken in the Brooklyn borough of New York, U.S., on Sunday, May 10, 2020. The video arm of Alphabet Inc.’s Google is offering new tools and audience statistics specifically for advertising on TV – screen space where YouTube has trailed cable channel.

The world’s largest video site recently started asking creators to use YouTube software to tag and track products featured in their clips. The data will then be linked to analytics and shopping tools from parent Google.

The goal is to convert YouTube’s bounty of videos into a vast catalog of items that viewers can peruse, click on and buy directly, according to people familiar with the situation. The company is also testing a new integration with Shopify Inc. for selling items through YouTube.

A YouTube spokesperson confirmed the company is testing these features with a limited number of video channels. Creators will have control over the products that are displayed, the spokesperson said. The company described this as an experiment and declined to share more details.



a close up of a stop sign: ISTANBUL, TURKEY - MARCH 23: The YouTube and Netflix app logos are seen on a television screen on March 23, 2018 in Istanbul, Turkey. The Government of Turkish President Recep Tayyip Erdogan passed a new law on March 22 extending the reach of the country's radio and TV censor to the internet. The new law will allow RTUK, the states media watchdog, to monitor online broadcasts and block content of social media sites and streaming services including Netflix and YouTube. Turkey already bans many websites including Wikipedia, which has been blocked for more than a year. The move came a day after private media company Dogan Media Company announced it would sell to pro-government conglomerate Demiroren Holding AS. The Dogan news group was the only remaining news outlet not to be under government control, the sale, which includes assets in CNN Turk and Hurriyet Newspaper completes the governments control of the Turkish media. (Photo by Chris McGrath/Getty Images)


© Photographer: Chris McGrath/Getty Images Europe
ISTANBUL, TURKEY – MARCH 23: The YouTube and Netflix app logos are seen on a television screen on March 23, 2018 in Istanbul, Turkey. The Government of Turkish President Recep Tayyip Erdogan passed a new law on March 22 extending the reach of the country’s radio and TV censor to the internet. The new law will allow RTUK, the states media watchdog, to monitor online broadcasts and block content of social media sites and streaming services including Netflix and YouTube. Turkey already bans many websites including Wikipedia, which has been blocked for more than a year. The move came a day after private media company Dogan Media Company announced it would sell to pro-government conglomerate Demiroren Holding AS. The Dogan news group was the only remaining news outlet not to be under government control, the sale, which includes assets in CNN Turk and Hurriyet Newspaper completes the governments control of the Turkish media. (Photo by Chris McGrath/Getty Images)

The moves have the potential to transform YouTube from an advertising giant into a new contender for e-commerce leaders such as Amazon.com Inc. and Alibaba Group Holding Ltd.

“YouTube is one of the least utilized assets,” said Andy Ellwood, president of e-commerce startup Basket. “If they decided they want to invest in it, it’s a huge opportunity for them.”

It’s unclear how YouTube will generate revenue from these sales. However, the service has begun offering subscriptions for creators and takes a cut of 30% from those payments.

What Bloomberg Intelligence says

Video: Amazon CEO Jeff Bezos questioned over use of third-party seller data (CNBC)

Amazon CEO Jeff Bezos questioned over use of third-party seller data

UP NEXT

UP NEXT

The e-commerce retail market, excluding China, may grow to $2.8 trillion by 2025, according to Bloomberg Intelligence. “Facebook is ahead in this game,” said Jitendra Waral, a Bloomberg Intelligence analyst. “But the sheer size of the e-commerce market and its future growth makes it too big to stay out of.”

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Alphabet Inc.’s Google has taken multiple stabs at online commerce, with limited success. The company has mostly preferred to sell ads that send people to other digital stores, rather than selling products itself.

However, the pandemic has hammered marketing budgets, particularly in the travel and physical retail sectors that are major Google advertisers. Meanwhile, e-commerce has boomed as people stay home and order more products online. That’s left Google watching from the sidelines as rivals such as Facebook Inc. and its Instagram app become hotbeds of online shopping. Amazon, the U.S. e-commerce Goliath, has seen sales soar, while Google suffered its first ever revenue decline in the second quarter.

Google Is Missing Out on the Covid E-Commerce Revolution

A recent RBC Capital survey of marketers revealed “social commerce” as a hot area that is “especially bullish” for Facebook and Pinterest Inc., a digital search and scrapbooking company. After Facebook boss Mark Zuckerberg unveiled an updated Shops feature for retailers in May, the company’s stock jumped. Google doesn’t want to miss out.

For months now, Google executives have signaled that YouTube will be central to their e-commerce strategy. On a recent earnings call, Chief Executive Officer Sundar Pichai suggested YouTube’s sea of popular product “unboxing” videos could be turned into a shopping opportunity. The video site is full of other popular categories, such as makeup and cooking tutorials, where creators tout commercial products on air.

The company has also revamped its e-commerce and payments division. In July, it announced a plan to lure merchants to Google Shopping, its online storefront, which included an integration with Shopify so that sellers could manage their inventory.

Late last year, YouTube began testing a similar Shopify integration for creators who can list as many as 12 items for sale on a digital carousel below their videos, according to the company. Merchandising is one of several strategies YouTube is pursuing to diversify revenue for creators beyond ads. At a minimum, the new measures could help YouTube deepen the data it collects from videos to strengthen its ads business.

Amazon and Walmart Inc. have tinkered with shoppable videos for several years. Thus far, neither retailer has shown much progress. In China, though, this business model has taken off. On Douyin, the Chinese version of TikTok, influencers use live streamed videos to hawk wares from lipstick to smartphones in real-time to hundreds of millions of users.

(Updates with analyst comment in eighth paragraph)

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