San Francisco Chronicle - (Sunday)
Google tries to turn YouTube into big shopping destination
Every toy, gadget and good you see on YouTube could soon be for sale online — not on Amazon, but right on YouTube itself.
The world’s largest video site recently started asking creators to use YouTube software to tag and track products featured in their clips. The data will then be linked to analytics and shopping tools from parent Google.
The goal is to convert YouTube’s bounty of videos into a vast catalog of items that viewers can peruse, click on and buy directly, according to people familiar with the situation. The company is also testing a new integration with Shopify for selling items through YouTube.
A YouTube representative confirmed that the company is testing these features on a limited number of video channels. Creators will have control over the products that are displayed, the spokesperson said. The company described this as an experiment and declined to share more details.
The moves have the potential to transform San Bruno’s YouTube from an advertising giant into a new contender for ecommerce leaders such as Amazon and Alibaba.
“YouTube is one of the least utilized assets,” said Andy Ellwood, president of ecommerce startup Basket. “If they decided they want to invest in it, it’s a huge opportunity for them.”
It’s unclear how YouTube will generate revenue from these sales. However, the service has begun offering subscriptions for creators and takes a cut of 30% from those payments.
Mountain View’s Google has taken stabs at online commerce, with limited success. The company has mostly preferred to sell ads that send people to other digital stores, rather than selling products itself.
However, the pandemic has hammered marketing budgets, particularly in the travel and physical retail sectors that are major Google advertisers.
Meanwhile, ecommerce has boomed as people stay home and shop online. That’s left Google watching from the sidelines as rivals such as Facebook and its Instagram app become hotbeds of online shopping. Amazon, the ecommerce Goliath, has seen sales soar, while Google suffered its first ever revenue decline in the second quarter.
A recent RBC Capital survey of marketers revealed “social commerce” as a hot area that is “especially bullish” for Facebook of Menlo Park and Pinterest, a San Francisco digital search and scrapbooking company. After Facebook boss Mark Zuckerberg unveiled an updated Shops feature for retailers in May, the company’s stock jumped. Google doesn’t want to miss out.
For months now, Google executives have signaled that YouTube will be central to their ecommerce strategy. On a recent earnings call, CEO Sundar Pichai suggested that YouTube’s sea of popular product unboxing videos could be turned into a shopping opportunity. The video site is full of other popular categories, such as makeup and cooking tutorials, where creators tout commercial products.
The company has also revamped its ecommerce and payments division. In July, it announced a plan to lure merchants to Google Shopping, its online storefront, which included an integration with Shopify so that sellers could manage their inventory.
Late last year, YouTube began testing a Shopify integration for creators who can list as many as 12 items for sale on a digital carousel below their videos, according to the company. Merchandising is one of several strategies YouTube is pursuing to diversify revenue for creators beyond ads. Amazon and Walmart have tinkered with shopping videos for several years, but neither has shown much progress. In China, though, this business model has taken off. On Douyin, the Chinese version of TikTok, influencers use live videos to hawk wares from lipstick to smartphones to hundreds of millions of users.