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Advertising giants Google and Facebook appear to be gearing up to take on e-commerce in 2020. Earlier this year, Google unveiled an updated shopping platform that allowed people to buy products directly from Google and even browse through a personalized homepage. Meanwhile, Facebook has also doubled down on e-commerce with this year’s debut of Instagram Checkout and WhatsApp Catalogs for Small Businesses. The company also reportedly plans on building a live shopping feature on Facebook Marketplace.Analysts say these shifts could gather billions in revenue for the two companies. Click here for more BI Prime stories.2020 could be the year that shopping on Facebook and Google takes off, as emerging technology trends push a convergence between the advertising and e-commerce industries.Both Facebook and Google currently collect billions of dollars in advertising revenue. The two tech giants now both seem to be ramping up their efforts in the e-commerce space, venturing into Amazon’s home territory. And analysts from Deutsche Bank, Bank of America and Baird say these efforts could change the competitive landscape in online commerce. Both companies have played a significant role in the e-commerce field for some time now, directing user traffic to websites or even allowing users to buy and sell from groups on Facebook Marketplace, a Craigslist-like offering that has been on the platform since 2007. Both companies have raked in advertising revenue, but not money from the transactions themselves. Now announcements from both Google and Facebook suggest the companies are ramping up their efforts to sell products online. Earlier this year, Google unveiled an updated shopping platform that allowed people to buy products directly from Google and even browse through a personalized homepage. Facebook meanwhile rolled out Instagram Checkout, which allows users to buy directly from brands on the platform. It also rolled out WhatsApp Catalogs last month, enabling small businesses to showcase their products for users to browse. And new strategic shifts have also signaled that these moves are only the beginning of Facebook and Google’s e-commerce efforts. Google’s new president of commerce, Bill Ready, was formerly PayPal’s chief operating officer. He held multiple positions at the online payments company, including CEO of Venmo and Braintree, which Baird analysts see as the right background to push Google’s users from the search engine to shop directly from the platform. “Google already facilitates roughly one-third of U.S. e-commerce, and with executive Bill Ready (former PayPal/Braintree/Venmo) soon at the helm as president of Google Commerce, we believe the company has a compelling opportunity to carve out even greater share by closing the loop with quasi-marketplace functionality” the report from Baird said. Meanwhile Facebook is exploring building a feature to allow buyers to place orders within a live video broadcast, a company spokeswoman confirmed. Ironically, Amazon has begun venturing into Google and Facebook’s territory in the meanwhile. The e-commerce behemoth has ramped up its ad offerings across the platform, according to a report from BI Intelligence. There are the four key reasons why Deutsche Bank and Baird are optimistic about Google and Facebook’s forays into e-commerce: 1. Strong user traffic has already built a solid base for e-commerce activityGoogle directed and influenced $196 billion in e-commerce traffic in 2019, which amounts to about a third of total e-commerce traffic in the US, Baird estimates. That’s not including its users on YouTube or Maps. Baird estimates the company will add on at least $9 billion, 15% of non-Amazon US e-commerce volumes, by 2025. Facebook’s large global advertising gives it a broad reach into companies’ sales and marketing efforts, according to Deutsche Bank. The bank’s latest analyst note on the subject predicts that the advertisers will eventually migrate to Facebook’s e-commerce catalog to help with product breadth and pricing.2. Payments will change “underexplored and underappreciated” platforms into meaningful revenue drivers”We believe the improved Facebook Marketplace is underexplored and underappreciated by investors given its original stigma and lack of revenue success over the past few years,” Deutsche Bank analysts wrote in a note. But with the improved payment flow brought by Facebook Pay (released last month), Deutsche Bank analysts said that Marketplace could become a “meaningful revenue driver” for the company. Baird also touches on a similar theme, commenting that Google’s new marketplace model allows users to check out products on-platform, “reducing friction and potentially driving higher conversion over time.”3. Businesses may be looking to find a counter-balance to Amazon’s marketplace.Businesses looking to “counter-balance Amazon’s strong market position,” may well choose to add their products on Google, Baird wrote.The same logic could apply to Facebook’s Instagram Checkouts and WhatsApp Catalogs for Small Businesses. 4. Google could leverage its strength in machine learning and artificial intelligence to offer shopping across its smart home products”We believe that Google’s strong machine learning and AI capabilities will enable the company to leverage Google Assistant, Android and connected devices to broaden the shopping ecosystem,” Baird wrote. The vision? “For example, ordering food or drinks while driving through Android Auto; finding products available in local stores; using Google Home and voice to add items to shopping lists,” Baird wrote. With only a few other companies able to offer shopping options across the same host of products, Baird predicts businesses will clamor to join Google Shopping’s platform.
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