Analysis: Can YouTube actually take on Amazon and Alibaba with new eCommerce offering?

Google is said to be testing a feature on YouTube that allows users to purchase products they see on videos. According to a Bloomberg report, YouTube is already asking creators to tag products used in their video and this data is then sent to Google. Google’s step into turning YouTube into a shopping destination comes as eCommerce takes centre stage with more purchases occurring online, as the pandemic shows no end in sight and restricted shopping trips continue globally. Notably though, the trend favouring eCommerce started long before the pandemic. In fact, according to Nielsen Global Covid-19 survey, here in Asia Pacific, two in five consumers used online shopping more often than before the outbreak. These consumers expected themselves to shop more often online.

Studies by Google competitor Facebook and Bain & Co also say that almost 70% of Southeast Asian consumers will go digital by the end of 2020. But despite the favourable statistics, industry players that Marketing spoke to about YouTube's new venture, remain critical of the move.

Marcus Ho, founder of digital marketing agency Brew Interactive, said although this is a smart move for Google, it is a little too late in the game. While adding product tags may be a good move, given that Instagram’s product tags “have been taking off well”, he reckons that consumers are too accustomed to buying products on their usual eCommerce stores. This may be because they trust the reviews on Amazon, or they prefer Alibaba because they want to buy products directly from the manufacturers.

Additionally, Ho said consumers are more tech-savvy these days, and are less likely to purchase products immediately off recommendation of someone on YouTube. According to a study from Bazaarvoice, 47% of customers are tired of influencer content that appears inauthentic while 62% of customers believe that influencer endorsements take advantage of impressionable audiences. This further decreases the likelihood that YouTube users will purchase products directly from the platform. Instead, users will do their own research and buy it from the source they are most comfortable with, Ho added.

Ho is also of the view that YouTube will not work as a shopping hub, especially since there are “too many things” the platform will have to work on to succeed. This ranges from building trust with consumers, to credibility and supply chain management.

Holding similar sentiments, Joseph Chua, managing partner at Aiken Digital said Google will not be in the same fighting ring with the likes of Amazon and Alibaba. “Amazon and Alibaba are no longer just eCommerce portals, but eCommerce supply chains,” he said, adding that Google will have to build its own eCommerce supply chain if it wants to play catch-up with the big players.

Chua also said that while the odds are seemingly stacked against Google, there is still a fighting chance for Google to establish itself as an eCommerce player. "Shopping has always been an experience that involves the consumers’ five senses, and Google has an advantage over usual eCommerce platforms as it is audio-visually (AV) led", Chua added. While eCommerce platforms usually engage with consumers’ sight, having images, texts, and worded reviews, Google is able to provide a far more succinct experience through YouTube. Instead of reading a three-page review about the product, consumers can understand the product faster by watching a five to 10 seconds video, Chua told Marketing.

“For example, in the past a car review took 45 minutes. Moving forward it will be a snackable version under one minute,” he added. For Google to establish itself as a shopping destination, Chua said it may have to update its user interface and user experience (UI/UX) to enable a smoother shopping experience for users. This way, users can quickly look through product listing and search for the specific products they want. YouTube may also want to consider on how to develop a unique product page to display more product information to the end user.

Meanwhile, for brands that are looking to jump onto the platform, Chua advised them to consider their path of purchase and where their usual traffic is coming from. If the business is more search-oriented and relies on other eCommerce platforms, tapping onto YouTube's shopping feature as an additional source of revenue could be helpful. But with the full details for this feature not out yet, Chua said brands should take into consideration how much it will cost to include the feature, and if the investment makes sense in brands' overall eCommerce strategy. If the cost of getting onboard increases the cost of business or requires additional investments, brands might have to think twice before diving in. Overall, Chua is of the opinion that brands should be mindful "chasing shiny new toys" and getting on emerging platforms until they prove to be stable. Should Google decide to eradicate the feature, businesses that chose to invest in it will suffer a loss, he explained.

There are definitely merits to YouTube venturing into the eCommerce space, according to Freda Kwok, head of marketing at AKINN & LUXIEE, which are two eCommerce start-ups under digital agency GERMS.  

“With YouTube’s move, it rides on an existing customer behavior, with the added benefit of keeping the customer experience native. General video consumption is also on the rise, and we can see this trend applicable for product reviews too. A great example will be Ryan’s World, a channel that started out reviewing toys. The video format allows more content to be fit in a more succinct manner, coupled with visual elements,” Kwok said.

She added that Google’s move puts YouTube at an exciting and competitive edge with fellow eCommerce giants. “Google has the base, and watching YouTube videos is already a part of many shoppers’ purchase journey. The marketplace and shoppable aspect of the experience feels like a natural progression,” Kwok said. Kwok also said that YouTube, at the end of the day, will have to note the objectivity and independence of the opinions linked to the shopping hub. However, she is of the view that this will neutralise itself as trusted video content producers generally protect their reputation and credibility.

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