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Google Takes on Amazon With Free Product Listings, Commission-Free Sales

In a bid to lure more retailers, Google is offering free listings and commission-free sales to sellers, among other benefits.
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Google is gunning for a bigger chunk of the ecommerce market by appealing to sellers. 

The tech giant announced this week that it's charging no fees for sellers to list products on Google Shopping. Over the past few months, Google made it free to list products on its shopping platform, and included those listings in search results at no charge; now, it's also eliminating commission fees when a customer buys a product through Google Shopping.

Alphabet  (GOOGL)  shares closed 3% lower on Thursday at $1,516.75.

"These changes are about providing all businesses—from small stores to national chains and online marketplaces—the best place to connect with customers, regardless of where a purchase eventually occurs," wrote Bill Ready, Google's president of commerce, in a blog post

In addition to eliminating commissions -- which typically range from 5% to 15% depending on the product -- Google is opening up its platform to third-party providers of payments and inventory management, starting with PayPal  (PYPL)  and Shopify  (SHOP) , in a bid to lure more retailers to Google. 

The changes amount to Google's latest challenge to Amazon's  (AMZN)  dominant position in ecommerce.  

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Google has introduced various initiatives over the years to better compete with Amazon, such as a Prime-esque same-day shipping subscription, called Google Express, that was eventually scrapped and rebranded as Google Shopping.

Since COVID-19 began, however, many more customers are turning to ecommerce -- and analysts believe that much of the sudden shift to online shopping will wind up being permanent. According to Adobe Analytics, U.S. consumers spent $73.2 billion online in June, up 76.2% year-over-year, and are expected to keep shopping online at high levels into the foreseeable future. 

"Every year that goes by, Amazon captures more and more product search, one of the most monetized categories on Google," said Raj De Datta, CEO of the commerce experience firm Bloomreach. "As more visitors start their journey on Amazon, fewer people start their shopping experience on Google. Google needed to change the game."

Beyond a lack of listing fees, the changes Google announced this week offers free search exposure to brands, potentially giving them access to much more retail demand. That may lure a broader range of retailers to Google Shopping -- and eventually shoppers as well.

Amazon shares have risen 57% year to date amid skyrocketing demand for its ecommerce services. Shares of Alphabet are up 10% year to date. 

Amazon and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club