Google Checkout - For Merchants

[Qui Gon Jinn]

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Several questions here aimed at merchants but can be replied to by anybody.

1. Have any merchants calculated pre & post free period how much money they would save, if any?

2. How reliable is it / will it be to existing method?

3. What are the advantages a merchant sees with Google Checkout over others?

4. What are the disadvantages a merchant sees with Google Checkout over others?

5. Do any merchants have a fear that their natural listings will be lowered if they don't incorporate Google Checkout?

6. Will the Google Checkout logo attached to advert increase or decrease CTR (click thru rate) and will this increase CR (conversion rate) or just increase ad spend?

7. Are merchants inclined to change their checkout procedures for the sake it being Google. In other words .. If It Ain't Broken Why Fix It?

[Spreader]

Hi Paul,

I hope you are well mate.

Prezzybox have not, nor have any immediate plans to introduce Google Checkout. However, we'll monitor the situation and potentially will introduce it later on this year. To be honest, this will be primarly based on market forces (if the market dictates then we'll most likely have to do it).

So, bearing that in mind, I've answered your questions below...

1. Have any merchants calculated pre & post free period how much money they would save, if any?

No. I think this is a difficult one - especially when you consider that you get 10x Adwords spend free transactions. I think with Google Checkout you pay a % of the transaction. Currently with a lot of PSP's (Payment Service Providers) you pay Xp per transaction. This could increase/decrease the cost in relation to your current cost significantly dependent on your ABV.

2. How reliable is it / will it be to existing method?

At the minute there's apparently a few teething problems (with it not recognising some UK address's). I would assume long term it will be as reliable as the current method merchants employ.

3. What are the advantages a merchant sees with Google Checkout over others?

The major advantage is the obvious brand awareness, which will potentially help to drive sales and ease any security issues the consuer may have. Another advantage is that the consumer only has to register once - as opposed to having to register with multiple merchants - and therefore internet shopping may be simpler.

4. What are the disadvantages a merchant sees with Google Checkout over others?

Apparently the merchant does not have acccess to the customers details once they have purchased. Not only could this create problems when actually delivering the product/liasing with the customer, but also negates any future marketing potential with that particular customer.

5. Do any merchants have a fear that their natural listings will be lowered if they don't incorporate Google Checkout?

In a word Yes. This is probably my biggest concern and one of the primary considerations for actually introducing Google Checkout. A large percentage of our traffic comes from google. I'd suggest this is similar for a number of merchants. So, if we were to be 'penalised' for not incorporating Google Checkout with regards to our natural listings then this would be very detrimental to our business.

6. Will the Google Checkout logo attached to advert increase or decrease CTR (click thru rate) and will this increase CR (conversion rate) or just increase ad spend?

I would say potentially yes.

If a user is a complete beginner then they may attribute more credibility/security to a website who is using the Google Checkout as it is a household name, whereas Prezzybox (for example) is not as recognised.

If a user is a seasoned internet shopper then they may prefer to use websites who have incorporated Google Checkout as it will (potentially) be quicker for them to do their shopping as they only need to log in to the one checkout (albeit everytime they visit a different shop).

7. Are merchants inclined to change their checkout procedures for the sake it being Google. In other words .. If It Ain't Broken Why Fix It?

Not initially, but if market forces dictate then we may need to, yes.

Thats it mate. As I say, we don't currently work with Google Checkout so some of the information may be incorrect, but this is my understanding of it...


Zak.

[BFG 9000]

I think with Google Checkout you pay a % of the transaction. Currently with a lot of PSP's (Payment Service Providers) you pay Xp per transaction.

What you need to consider is that google checkout completely replaces your current credit card merchant account - rather than passing data to them.

So, to give an example - I used to have a credit card merchant account provided by Natwest/Streamline - they would charge 1.935% of credit card transactions, 3.4% for commercial credit card transactions & £0.20 for each debit card transaction.
I was at the time using Secpay for online transaction processing (but similar fees apply with protx, worldpay etc.) they would charge me £0.20 per transaction plus £20.00 per month.

Using these figures the cost of accepting credit/debit cards ranges from 2.5% - 3.5% + 20p/transaction + £20/month.

With google checkout until 2008 it's completely 100% free.
From 2008 the charges are set at approx 1.5% with the possibility to reduce your fees by 10x your adwords spend.

It's easy to see that this is a much better deal than you'll get anywhere else.

One of the sites I currently manage has negotiated a rate for their credit card merchant account of 1.1% for credit cards, but this is still 3.4% for commercial cards & there is still the per transaction fee to pay to the PSP so (with the potential to reduce fees according to adwords spend) we're still better off with google checkout.


TTFN

BFG

[Qui Gon Jinn]

Ok sounding thick here for the moment, is GC undercutting not only Paypal & WorldPay & other Payment Service Providers, but also cheaper than the banks? Both Pre 2008 & into 2008?

Assuming a merchant with 10000 sales at £50 = £500k. What could a merchant save?

[woutermols]

Hi,

Some disadvantages I see with regards to the Google Cart are:

1. It does not offer the option of detailed (product level) sales tracking. I.e. 3 Blue Widgets at £4, Total £12, 4 Green Widgets at £4.50 Total £18 etc.
2. As far as I can see it does not support facilities like local cookies which is ideal in situations where a merchant is available through various networks. This can result in duplicate orders in multiple networks if and when the customer has visited the merchant's site through two affiliate links from different networks.
3. Google will now be able to track what keywords in AdWords result in sales and what the value of these sales are. This is great info for them to see what keywords they can increase minimum bid prices for if they would like to do so.
4. It would financially be in Google's interest to put Google Cart merchants higher in the SERPS and in the Adwords adverts as they stand to earn more from these merchants. At the same time forcing merchants to use Google Cart if they want to stand a chance in their own industry.
5. Google can glean from their stats what industries are worth investing in, becoming your biggest competitor in doing so. Do you really think Google will not take away your business if it can profit more from it by becoming your direct competitor?

[drivetowin]

Ok sounding thick here for the moment, is GC undercutting not only Paypal & WorldPay & other Payment Service Providers, but also cheaper than the banks? Both Pre 2008 & into 2008?

Assuming a merchant with 10000 sales at £50 = £500k. What could a merchant save?

If we assume an average card processing fee of 2% + 0.20p per transaction from other providers (which would seem a fair average from Paypal, Protx and Worldpay) (allowing for bank merchant charges too for Protx and Worldpay)

then Pre 2008 the merchant would save:

10000 x 0.20 = £2,000
10000 x 50 x 0.02 = 500000 x 0.02 = £10,000

Total saving pre 2008 £12,000

Post 2008

Merchant costs without Google = £12,000
Merchant costs with Google = £9,000

10000 x 0.15 = £1,500
10000 x 50 x 0.015 = 500000 * 0.015 = £7,500

Total saving post 2008 £3,000
But - if merchant spent £900 on Adwords then they would get £9,000 processing costs free - so any savvy merchant is going to do that

So then - total saving post 2008 £11,100.

Now I hear what people are saying about Google this, Google that, but to many merchants doing £500,000 per year turnover, the chance to boost their bottom line by an extra £12,000 a year is going to be hard to resist.

[BFG 9000]

Ok sounding thick here for the moment, is GC undercutting not only Paypal & WorldPay & other Payment Service Providers, but also cheaper than the banks? Both Pre 2008 & into 2008?

Assuming a merchant with 10000 sales at £50 = £500k. What could a merchant save?

They are definately undercutting paypal & worldpay.
Given that level of sales, I'd say they are probably (depending on the negotiation skills of your finance team) undercutting the banks as well.

TTFN

BFG

[BFG 9000]

Hi,1. It does not offer the option of detailed (product level) sales tracking. I.e. 3 Blue Widgets at £4, Total £12, 4 Green Widgets at £4.50 Total £18 etc.

Agreed

2. As far as I can see it does not support facilities like local cookies which is ideal in situations where a merchant is available through various networks. This can result in duplicate orders in multiple networks if and when the customer has visited the merchant's site through two affiliate links from different networks.

Nope - this is no more of a problem than when using current systems - when the merchant sends the xml request to google, they send whatever tracking code they see fit - it's down to them to decide which merchants tracking code to send.

3. Google will now be able to track what keywords in AdWords result in sales and what the value of these sales are. This is great info for them to see what keywords they can increase minimum bid prices for if they would like to do so.

Agreed - can you see them actually doing it though?

4. It would financially be in Google's interest to put Google Cart merchants higher in the SERPS and in the Adwords adverts as they stand to earn more from these merchants. At the same time forcing merchants to use Google Cart if they want to stand a chance in their own industry.

Nope (not financially anyway) - especially not this year. It costs money to process card transactions - they're going to be losing money here![/QUOTE]

[woutermols]

Nope (not financially anyway) - especially not this year. It costs money to process card transactions - they're going to be losing money here!

I'm not looking at this from a 'this year' perspective, I am looking at this in the long run. Google does nothing that does not somehow, somewhere have a positive financial impact.

I don't believe for a minute that after year 1 they don't make money on each 'paid for' transaction. And with regards to the non paid for transactions because of adware spend... it just depends on the profit margins they have on those ads and what the real costs are for each transaction.

And once things start ticking over, the merchants are using their cart, how long do you think the free transactions will last?

Call me sceptical, but I don't believe Google is the good Samaritan giving things away. They will always gain something from it. But like any big company they can afford to do certain things to push their competition out of the market. Short term loss for the long term gain, that's how it works with these companies.

[drivetowin]

Google does nothing that does not somehow, somewhere have a positive financial impact.

True, but isn't that true of 99.99% of businesses, large and small. Even if someone takes the moral high ground and says 'I am not doing this' in the long run are they not doing it in an attempt to win more business from people who admire their stance in not doing this - whatever this is in each particular instance.

And once things start ticking over, the merchants are using their cart, how long do you think the free transactions will last?

They have already said transactions are only free until January 2008.

Short term loss for the long term gain, that's how it works with these companies.

To be fair, this is a common competitive tactic amongst companies large and small, I am aware of a couple of relatively small merchants on this forum who have sold particular items at a loss to win customers in the longer term - it's plain retail economics - nothing sinister - it just depends on the depth of your pockets how long you can keep it up.

Some people have a problem with the fact that large corporates like Tesco and Google can cross subsidise from one section of their business to another and claim that is unfair - personally I've never had any problem with it, it's their money (or their shareholders/investors money) and they should be able to use it how they wish - I don't see any difference to Google or Tesco doing this and a smaller company attracting investment or taking a bank loan and using it to choose to sell items below cost in the short term to win a long term customer base.

After all let's face it if we were all unable to undertake commercial activity that we knew would make a short term loss, most affiliates would be unable to undertake any PPC activity at all - most PPC campaigns are based on taking an inital loss per transaction until the CTR and conversion rates combine to bring down the CPC to a level which allows a profit.

[woutermols]

Hi Keith,

The reply was with regards to this:

It would financially be in Google's interest to put Google Cart merchants higher in the SERPS and in the Adwords adverts as they stand to earn more from these merchants. At the same time forcing merchants to use Google Cart if they want to stand a chance in their own industry.

and BFG 9000's reply to it.

I do see it as a problem if and when the scenario I sketched does take place. And because of the reasons I mentioned it would be in Google's interest to do so because they would stand to make more money out of it. In that case it would also force merchants to make use of the Google Cart system to at least also have a chance to have good listings in their PPC campaigns or the regular SERPS.

Of course we will have to wait and see what happens, but certainly these are tempting things to do to generate more revenue for your company.

It is NOT 'Google making money' that I have a problem with, but the temptations to take away the level playing field. I don't think anyone here would not feel tempted to give GC merchants the advantage were they in a likewise position.

I thought this thread was about advantages and disadvantages for merchants. I simply highlighted some I thought were there (or might possibly rise at some point in time).

[woutermols]

Just out of interest, can the Google Checkout system be used as follows:

1. Merchant has their own checkout page (on a secure page).
2. Details (including CC) are sent over a secure connection to Google.
3. Google checks / validates the CC and passes back success or failure.
4. Merchant displays either a 'Thank you' or a 'Transaction failed' page.

A bit like you can do with other payment processors???

Also, I tried to find this as well, how does the shopping cart software know to change the status of an order to 'Paid'??? Or does the merchant have to do this manually??? And if this is a manual procedure, is what is saved with Google checkout worth the extra hassle / work compared to other payment processors where this can be automated???

[drivetowin]

Hi Wouter

As far as I can see, no, Google Checkout would not let you do the example you have shown - they collect all the credit card details on their site - all the merchant transmits to Google are the items ordered, the quantity and the price (plus delivery charges etc) - Google then collects the payment details, the delivery address and the billing address and after processing, feeds the delivery address and the billing address back to the merchant (but not any of the card details)

Re your second question, the merchant provides Google with a callback url as part of the merchant setup, and Google then posts order updates for each order (i.e. approved, failed, cancelled etc) to this URL. The merchant will need to have some coding on the page at the callback url to process the info from Google and update their internal systems (just like the merchant would with other payment processors).

[Dan Rudman]

Apparently the merchant does not have acccess to the customers details once they have purchased. Not only could this create problems when actually delivering the product/liasing with the customer, but also negates any future marketing potential with that particular customer.

Zak.

Can anyone expand on this? surely the merchant must have the customer details otherwise how could you post the goods out?

[drivetowin]

The merchant does get the customer details - the exception to this is that the customer can choose not to give the merchant their email address in which case the merchant gets to see a google email address which the merchant can send emails related to the order to, and google then stores those emails in the customers Google checkout management area and optionally forwards those emails on to the customer.