July 4, 2019

Searching for Google in Silicon Valley

American dog (photo: Javier Brosch/Shutterstock)
US summer tour: Part one (photo: Javier Brosch/Shutterstock)
Despite Donald Trump, escalating trade wars and tough competition, the sheer size of the American retail market never fails to attract. According to the Food Marketing Institute, the US counts 38,300 stores, 4.8 million employees and annual sales north of $700bn. America is also a melting pot of ideas and home to so many Silicon Valley innovators who have forged today's digital revolution.

As part of an annual summer tour, our newspaper visited the land of seemingly endless opportunity and Big Tech. The first meeting was with Google for a chat with Daniel Alegre, President for Strategic Partnerships in Commerce & Retail, at global headquarters in Mountain View, California...

The talk ranged from cooperation with French retail giant Carrefour to how the company entered online retailing and the potential behind voice-controlled systems.

In 2018 the online behemoth posted sales north of $136bn. The lion's share (85 per cent) came from advertising revenues. Its cyberspace empire includes Google Maps and the video portal YouTube. Net profit came in at a staggering $30.7bn.

The share price of Nasdaq-listed parent-company Alphabet, Inc. has been treading water since the beginning of the year but has nearly doubled since 2014.

For some Google is a hero of the internet economy. Others criticise the online giant as an intransparent monopolist with a patchy record on data protection. Love or hate Google, though, there is no way around it.

"We make retailers successful"

Daniel Alegre, President Global Retail & Shopping (photo: Mathias Himberg)
(photo: Mathias Himberg)
Daniel Alegre, President Global Retail & Shopping
Mr. Alegre, how happy are you with offline grocery partnerships such as Walmart and Carrefour?

We have long-standing relationships with offline retailers that work very well. The partnership with Carrefour, for example, is solid and strong. We make their full inventory available on our platform. We ensure that customers can order all these products online with Google and pick them up in Carrefour stores.

But many of your competitors, including Amazon, Ebay, and Alibaba, offer similar partnerships. Why should retailers prefer you?

As our business has evolved, the number of touchpoints we have with consumers across their shopper journey has expanded. They are no longer just searching on Google; they may also go onto YouTube to see what a product could look like. They get onto image search to get inspiration on what you should cook today. Or they visit Google Maps to search for a restaurant or a supermarket close by.

How can that benefit retailers?

Google has become a purchasing partner for consumers. At any point in their journey we are the touchpoint where retailers can connect with the consumer.

Giving you the power of big data?

It's not about the amount of data, but about how to use it in the best way possible. Our goal is to deliver good and valuable advertising experiences to consumers. This is the only way to keep the whole ecosystem sustainable and successful.

Is that really more than Amazon or Ebay can do?

The main goal for retailers is to get their inventory online, and we show the customer the best delivery and pick-up options. But, above all, we really care about an open and vibrant ecosystem. We are not a retailer ourselves, and we don't want to be. We are in the business of making retailers successful. Our interests are completely aligned with them. We put the retailer brand first.

Then why do you want to play a bigger role in e-commerce yourself?

We are only the platform. We see ourselves as an enabler who gets retailers and brands closer to their clients and gives consumers more ease-of-use.

Google headoffice sign (photo: Mathias Himberg)
Mathias Himberg
Small sign for Big Tech
How does that work?

Historically, we've enabled retailers and manufacturers to provide ad clicks at the right time and to send the user over to the purchase. But we have found that any friction in the shopper journey leads to significant shopping drop-offs.  If the customer, for example, is sent from Google Search to a landing page, to a product page, to creating an account, to giving his payment credentials – at each of these points, there is a significant drop-off rate.

So how can you reduce this friction?

We deliver identity and payment.  We have a tremendous number of users being signed in, for instance, through their android phone or Chrome browser. These users have in many cases provided payment credentials for Play Store or YouTube subscriptions. Their identity and payment method having been set, they can buy a product with just one click. That will reduce drop-offs significantly.

But then retailers wouldn't be visible anymore...

Oh, yes. We present the retailer brand prominently. What's more, the user can opt to get mails from the retailer, and the delivery comes directly from them.

As from when will this be possible?

Technically, we already launched our transactions platform seven years ago. But we've accelerated it over the last 15 months. It's now available in the United States and France, and we're expanding it internationally.

When will you bring it to Germany?

We are still working on it. We know that Germany is a market where this could be really useful, because consumers and retailers are asking for it. But our focus for 2019 is to develop France and the US.

How far have you got with your transaction platform work so far?

16 months ago we only had about 25 US retailers on the platform. Now there are thousands, including the major ones. Food retailers do not offer cold storage products yet, but dry goods and everyday essentials.

But aren't you a bit late to the table? There are already lots of online retailers such as Amazon or Ebay. And a lot of search goes through Amazon nowadays...

Amazon is an important partner for us. Sure, there are a whole host of players who have built platforms for e-commerce. But we love that. As long as there's competition in the market, we know that users will continue to come to us to get authoritative answers on the best products and retailers for their needs.

Isn't Amazon much further ahead when it comes to voice commerce?

As of today, the Assistant is available on more than one billion devices, including speakers like Google Home, Smart Displays, Android phones and tablets, iPhones, TVs, watches and more.

Lawn in front of Google HQ (photo: Mathias Himberg)
Mathias Himberg
Time for some Californian grass
How will that help grocers?

People use voice tremendously for recipes and shopping lists. We're working with Carrefour to make these lists come to life. By linking our data, we know that, if a specific customer says milk, he really means low-fat almond milk by Blue Diamond. If he says eggs, he means six brown organic eggs by Kirkland. The customer no longer has to specify.

By which point many brand manufacturers fear they will lose relevance because you will be the one who decides what people mean by milk or eggs...

You could say the same thing about a traditional shopping list. The shopper knows very well what kind of milk or eggs he wants. But in-store on the shelf right below it says: "Try Nestlé's new almond milk". The same thing will work with the Assistant.

How could that work?

Voice will be combined with visuals because consumers don't remember all the items on the list and want to have an overview. At this point you can inject an offer. This is not going to be a clear, clean, static list. We also know that consumers actually want the experience of being shown new products.

When will you bring your drones and autonomous cars to Europe?

Our ambitions are big. But we don't have a timetable for that yet.

When it comes to advertising, many marketers criticize Google for a lack of transparency regarding the return on investment. What would you reply?

Our main goal is to provide advertisers with the transparency and data they need to be successful with their business. We're fully transparent as to the performance of every ad. The advertiser can see all the data if the retailer enables conversion tracking.

What about privacy? European consumer advocates claim that you even sell personal data to marketing companies...

The data we collect is only used to provide the best offer for every consumer on our platform. We don't sell it or give it to third parties. On the contrary, the protection of consumer data privacy is one of our foremost aims. We fundamentally believe that consumers should be given complete control as to if and how their data is used. Therefore we are completely transparent about our privacy policy. Our Google account is the best example of how to provide transparency and give control to users.

Then why is there a totally different perception within the general public?

I think one reason for this is fear of the unknown. Moreover, there are other players who may not have been as careful about privacy as we are. This is unfortunately impacting the entire industry.

How do you intend to allay retailers' concerns?

By giving them a good experience and by providing value to their businesses. We really care about putting all the cards on the table and removing any mistrust that may exist.

Lebensmittel Zeitung with its online sisters (photo: LZ)
photo: LZ
Our German retail B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: 'Völlig transparent' by features editor Mathias Himberg on pages 25 & 26 of Lebensmittel Zeitung, no. 27, 05.07.2019

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