Google to turn YouTube into a major shopping destination
| Friday | 9th October, 2020Summary:
Every toy, gadget 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 click on and buy directly, according to people familiar with the situation. The company is also testing a new integration with Shopify Inc. for selling items through YouTube.
The moves have the potential to transform YouTube from an advertising giant into a new contender for e-commerce leaders such as Amazon.com Inc and Alibaba Group Holding Ltd.
A YouTube spokesperson confirmed the company is testing these features with 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.
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.
Alphabet Inc’s Google has taken multiple 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 battered marketing budgets, particularly in the travel and physical retail sectors that are major Google advertisers. Meanwhile, e-commerce has boomed as people stay home and order more products online. Its competitors such as Facebook Inc. and its Instagram app become hotbeds of online shopping. Amazon, the US e-commerce Goliath, has seen sales soar, while Google suffered its first ever revenue decline in the second quarter.
For months now, Google executives have signaled that YouTube will be central to their e-commerce strategy. On a recent earnings call, Chief Executive Officer Sundar Pichai suggested 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 on air.
The company has also revamped its e-commerce and payments division. In July, it announced a plan to lure merchants to Google Shopping, its online storefront, which included integration with Shopify so that sellers could manage their inventory.
Late last year, YouTube began testing a similar 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. At a minimum, the new measures could help YouTube deepen the data it collects from videos to strengthen its ads business.