1200% of almost nothing is still almost nothing

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Sales via Google Checkout are up 1200% in Q4. WOW.” exclaims Scott Wingo on his blog. “They admittedly started with a small base, but it’s very interesting to see the growth presented this way. One has to wonder how long eBay’s argument for not allowing Google Checkout will hold water that it is an “unproven system”. Maybe when they overtake the Paypal transaction volume?” The big question is whether that’s likely to happen, and if it does is Checkout desirable on eBay in the first place?

Many sellers already will do almost anything to persuade buyers not to pay with PayPal – reverse surcharging (discounting for all payment methods other than PayPal) was popularised when eBay outlawed surcharging for PayPal. Nochex, Cheques, Bank Transfer, Postal Orders, Merchant Account they cry, and yet overwhelming buyers vote with their feet and continue to use PayPal whenever the opportunity arises. Sure that’s partly because it’s a couple of clicks for an integrated solution but isn’t that exactly what Google are promising? Sellers need to realise that if they start splitting payments between PayPal and Nochex, Checkout et al they’re the ones that will lose. Sellers get discounts on PayPal for transactional volume and dropping down a level because you divert funds through another payment system could be cutting off your nose to spite your face.

So what is Checkout at the end of the day? It’s certainly not a direct competitor to PayPal, it’s more akin to an e-wallet

The electronic equivalent of a wallet for e-commerce transactions. Also called an “e-wallet,” it holds credit card data and passwords for logging into Web sites. The wallet data may reside in the user’s machine or on the servers of the wallet service. When stored in the client machine, the wallet may use a digital certificate that identifies the authorized card holder. Microsoft’s Passport, Yahoo! Wallet and Gator’s eWallet are examples of digital wallets.

If Microsoft et al failed with the digital wallet (or does anyone out there actually use it?) what makes you think Google Checkout is likely to succeed? In comparison PayPal is entrenched for eBay users and even if Checkout was allowed on the site take up by buyers is likely to be slow (consider usage of Nochex). Meanwhile PayPal continue to win merchant accounts – in the last year everything from Monster in the US and DHL, Loot, Napster, Sony, Betfair and Ladbrokes in the UK have become PayPal enabled.

Checkout is great for Google…. it helps lock adword users into the brand (or it would do if they weren’t giving Checkout away for the next year anyway), but what counts is what buyers want. On eBay they have voted almost unilaterally for PayPal eschewing alternatives like Nochex. For other sites will buyers be tempted to sign up for Checkout or will they just go ahead and enter their credit card direct into the sellers online merchant account?

2 Responses

  1. Just a few points that came to mind while reading your post:

    “buyers vote with their feet and continue to use PayPal whenever the opportunity arises.” – We will see how the buyers vote when (if) eBay allows Google Checkout to be used.

    As a Platinum PowerSeller myself I sure would like to take advantage of the free Checkout processing. That alone would put an extra few thousand a month in my pocket instead of giving PayPal 2%+ on each transaction.

    Your comparison of Google Checkout with Nochex is faulty and does not account for the tremendous brand equity the Google name already carries with End Users. Buyers will not hesitate to use Google Checkout on eBay, especially when sellers can pass on some of that 2% savings and let buyers save also.

    Anyone integrating with Google Checkout will notice that the item price (for products) is named ‘startPrice’… this is intentional as Google can turn on Bidding at any moment. They are simply waiting for Checkout to hit ciritcal mass so that Google can offer FREE Auctions by next fall.

    Checkout will hit critical mass when the majority of online retailers support (or start forcing users to use) Google Checkout. With FREE payment processing, believe me, as a retailer, I and my peers are ALL OVER THIS. So online retailers are already flocking to Checkout. Buyers will follow the discounts and rebates and Checkout Buyers will hit critical mass by next fall.

    If eBay has not allowed Google Checkout by next fall. You will see what VOTING WITH YOUR FEET means as sellers and buyers alike flock to Free Google Auctions with Free Google Checkout Payment Processing.

    PS: I did an experiment and sent 25,000 of my items from my eBay store to Google Base with Checkout enabled. The next day 20% of my sales came from Base + Checkout.

    Does anyone have a better idea of where this is leading?

    How can eBay out maneuver Google?

  2. I honestly don’t think your buyers are going to care that Checkout would put extra money in your pocket. They want to click and have paid: that’s it, end of story. Why on earth would it matter to them what processor is used?

    Google have to some extent purchased themselves an advantage by the discounts ($10 off $30, $20 off $50) they’ve offered this Xmas, which has led merchants to push their buyers to use Checkout, and those buyers to be very willing to be pushed, but 2% savings? Puhlease. You’ve got to be WAY in excess of the average eBay transaction value before 2% starts making a difference.


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