Amazon vs Google vs Consumer: Who wins in 2013?

Amazon vs Google vs Consumer: Who wins 2013 eCommerce?

 Rob Taylor


When Amazon and Google independently achieved supernova status as best of class and each became household synonyms for shopping and searching respectively, who knew that the two would eventually find themselves fighting for each other’s business. Amazon started by advertising the largest book library in the known universe and soon became known as the giant alpha of e-commerce. During the same timeframe, Google was mastering and eventually dominating the search engine universe.

Early on, Jeff Bezos, an executive of Amazon and also an early backer of Google, noticed that Google was busy scanning and digitizing books and product catalogs. Bezos mentioned to Reuters that he thought Google was already preparing to tread on Amazon’s territory.

Headlines on Google rivalries began with Google vs Yahoo and other search engines, then Google vs advertisers, Google vs Facebook and more recently Google vs Apple. Now in the coming year or two, we shall see if Google can become an ecommerce colossus as Google enters the ring with Amazon.

Here’s a look on the arenas where Amazon and Google are going head to head in 2013. Or, as some may say, what will happen as Google invades the Amazon territory? Can Amazon hold its own?

Amazing advertising

Google is doing a phenomenal job with its ads business with more revenues than the combined earnings of all print media in the United States. Not so quietly, Amazon has been building a competitor to Google AdSense, which according to reports will be launched in Q1 2013.

Amazon may not have the luxury of a massive search database like Google, not to mentioned all of the data saved from email and android services, but all those product searches you’re doing on Amazon won’t go to waste. The platform that Amazon is introducing will have targeted ads for shoppers based on their browsing and shopping habits. Amazon has compiled complete data on what products people are actually spending their money on – also known as conversion data. Amazon data analytics can access what you bought and what you are shopping for.

The stats are seemingly on Amazon’s side as well. According to the latest study done by research firm Forrester, 30% of online shoppers went straight to Amazon as the starting point of their spending spree, with only 13% said that they began their online shopping ritual by going to Google. This was a reversal of the trend recorded just two short years ago.

At stake for Google are the company’s multi-billion dollar ads-based revenues.

The Cloud

The two companies are also looking to one-up each other in the cloud sector. Amazon is clearly in the lead, as it launched its cloud computing business six years ago, but Google is more than eager to shake up the establishment. To a certain extent, Amazon has taken Google’s bait.

Following Google’s decision to cut its cloud storage fees by 20% last month, Amazon followed suit and reduced its fees by 25%. It was Google who made the last move, as it shaved off an additional 10%. So Google may be able to offer lower cloud pricing, but Amazon should be able to offer lower ecommerce pricing by relying on currently higher sales volumes.

Tablet and Phones for Commerce

Amazon under Jeff Bezos was first to release an Android-based tablet – the original Kindle Fire – that managed to challenge Apple’s iPad in the tablet market. In doing so, it has also cut Google out of the loop by introducing its own application store.

It wasn’t long until Google responded to Amazon’s move. The Nexus 7 tablet, with its great specs and sub-$200 price point, was introduced and launched in the middle of this year to great commercial success. Its popularity also paved the way for an even bigger tab that bears Google’s Nexus branding to enter the market, the Nexus 10. Google is following Amazon’s way of selling the hardware cheap and reap the benefits on future purchased content.

In 2012, Amazon has introduced a new lineup more advance Kindle Fire tablets this year. They all come with a modified version of Android, yet their owners are locked inside Amazon’s walls (much like the way the old AOL tried keep its subsribers using its advertisers).

In 2013, we’ll also see Amazon entering the smartphone business. According to Foxconn, it’s readying 5 million Amazon-branded phones to be launched in Q2/Q3 2013. The phone will most likely use Google’s Android OS.

Unlike Apple, which profits mainly from the sale of the hardware, both Amazon and Google view the sale of branded tablets and smartphones as a vehicle for ecommerce. Thus they can and do sell the tablets at a deep discount, sometimes even a loss, because the revenues from related ongoing online sales made from the devices far outpace the margin that could be made on a one time sale of the hardware. Somewhat like free television, consumers reap the benefit of discounted tablets with the expectation that they will be purchasing products for many years on their tablets.

Digital Content

Amazon’s digital storefront has the lead when it comes to movies, TV shows, and music, while Google Play has more e-books and apps. Prices for movie rentals and purchase start at $3.99 and $10.99 on both stores, while a music album typically costs $10.99 – though Amazon seems to have better discount for new releases.

There’s no denying that Google has been aggressively adding more content to its Play Store and making it available in more markets. For example, it has scored deals with almost all major movie studios to bring their classic titles and new box office hits to the Play Store.

As for Amazon, it will continue to offer added benefits for its Amazon Prime members, providing them with more incentives to stick with Amazon’s content ecosystem and choose Kindle Fire over competing tablets. Oh right, the same users can also access their Amazon content on “pure” Android and Apple devices.

Conclusion

Consumers are the ultimate winners from competition. Not only does this competition force companies to push the innovation envelope, but it also challenges them to provide better services and lower prices, often even free services, to end users. Whoever comes up on top on each of the category in 2013, it’s us customers who will emerge as winners too.