Google’s Checkout perks paying off
By Yi-Wyn Yen
Since Google launched its Checkout online payment service 18 months ago, industry insiders have wondered if its aggressive marketing promotions were worth the money.
The company, which has been tight-lipped about the performance of its Checkout campaign, revealed new figures to Fortune on Monday that suggest it’s making inroads in luring customers and merchants.
Google says web shoppers who’ve signed up for Checkout — which stores credit card and other personal information so consumers can make quick and easy purchases — are 10 percent more likely to click on an ad that features a Checkout button and 40 percent more likely to make an online purchase once they reach a site. In other words, if an online retailer uses Checkout and spends ad dollars on Google (GOOG), it improves the chance that shoppers will make purchases on its site.
“These are outstanding results,” says Tom Oliveri, product marketing manager for Checkout. “Merchants are seeing the benefits of higher traffic and more sales. Google is bringing those stores better buying experiences.”
Nevertheless, Google has yet to pose a significant threat to eBay’s PayPal (EBAY), the clear leader in third-party online payment services. PayPal (EBAY), which lets people transfer money from their bank accounts to other individuals, raked in $470 million in the third quarter — a 35 percent increase from a year earlier — to make up 25 percent of eBay’s revenue. PayPal, which began accepting MasterCard (MA) payments on sites that don’t offer its service last month, has roughly 150 million users and hundreds of thousands of merchants. Oliveri says Checkout has more than 100,000 merchants and millions of users.
Checkout has cost Google some serious cash. Wall Street analysts estimate that Google has invested between $80 million to $100 million since the June 2006 launch to get both sellers and shoppers to use the service. As an incentive to shoppers, Google started giving discounts to its users last year and has continued the practice during the current holiday season. It is also offering free shipping on purchases over $50 and frequent-flier miles on most major airlines. For merchants, Google has waived processing fees between November 2006 and January 2008.
But once the financial promos end, will merchants continue to flock to Checkout? As long as they spend on AdWords, which allows advertisers to bid for prime real estate on Google’s site whenever a person performs keyword searches, it makes financial sense.
Lanny Morton, who sells sports equipment on SportsCloseouts.com, uses Amazon (AMZN), eBay, Overstock (OSTK) and Google to drive traffic to his site. He says that since he began using Checkout 18 months ago, traffic has doubled and browsers have converted into buyers at a rate of 3 percent, up from 1 percent previously.
“In the last seven days, I’ve spent $45.85 on Google AdWords to get 136 click-throughs for a specific pair of snowboard bindings,” says Morton. “I only need to sell two to make a profit, and I’ve sold six. That’s not bad at all. And for the others, they may come in for bindings, but end up buying a baseball bat.”
“I love how some peoples comments look like a five year old wrote them. Have some self pride, at least use full sentances.” Prior to insulting people, one should note that “sentances” is spelled s-e-n-t-e-n-c-e-s. At any rate, I am a merchant that has used both versions and done programming with the API’s, they’re both frustrating. Paypal is not user friendly, and simple tasks are very difficult to perform. Can someone on this list start a new service?
Love Google’s checkout! I’ve used it several times and love the fact that your info is held with google, rather tan floating about with many merchants. Fast, easy and effortless. Happy Buying. P.s. Google innovates, also love their Documents with upload and publish features.
I agree these other comments seem abnormal. Google Checkout has always worked great for me.
You’re Kidding Right? Google Checkout and everything else google has built outside ad words is complete crap. Sure if you want hackers to get your money take over your lives go right ahead and enter that CC number into google checkout. The most unsecure platform and web company out there.
I don’t think you have your facts, or you are being paid off by google to exaggerate the truth about checkout.
Google did not disclose the average savings from merchants. Several online retailers told me they’re saving 2-3% in transaction fees because Google is waiving those costs. That’s money going straight back to the owner’s pocket. In comparison, they say they’re giving PayPal $600-700 a week in processing fees.
Having said that, if you’re an online merchant, that 10% click-through rate effectively means you’re getting a 10% economic bump by using Checkout. Consider you’re spending $1 per click, and your competitor is spending $1.10. Because you’re showing up 10% higher, you’re getting the same returns. Hope that helps, P.J.
5/6 comments = negative. I wonder Paypal or eBay employees are writing these statements of questionable intent. From my own personal use with Google Checkout, all 27 of my transactions from the past two years were successful, and I have used multiple CCs and shipping address.
As for K Y’s rather strong “dislike” for Google Checkout, I just assume he doesn’t understand what buyer protection means. If you have ever read any of Checkout’s protection policy, you will realize over 99% of their transactions are protected. The remaining friction is result CCV # not matching the CC#.
Doesn’t Google offer an advertising (Adwords/Adsense) discount or credit to Checkout users? I thought you would tell us how much cash Checkout advertisers saved on advertising, or some relevant statistic.
To me, that was clearly the reason to use Checkout (over Paypal).
google checkout has never worked for me. it keeps rejecting my platinum (and other) credit cards. Upon contacting the customer service, i was told to use “some other card”— way to go CUSTOMER SERVICE!!! I was using the CC that i use about 10-15 times a day…. check your systems GOOG.
Why would you need “buyer protection” when it comes with the credit card that you use?
I second KY’s comments. I ordered from a company that NEVER sent me the product although I contacted them and Google several times. Google did NOTHING — thank goodness it was only a $10 loss. Never again.
I love how some peoples comments look like a five year old wrote them. Have some self pride, at least use full sentances.
I hate Google Checkout. They don’t care of buyer. They don’t have buyer protection. That’s the reason in year 2007, I didn’t use Google checkout
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Go Lanny!!