Meet the Exec Crafting Google’s Vision for the Future of Shopping (Maybe This Time It’ll Work!)
Like many of its peers, Google has its own take on what the future of digitally-enabled commerce should look like.
In fact, it has had a lot of takes — from Froogle to Google Checkout — most of which it has gotten wrong over the years of trying. While the search giant tends to dominate its market, e-commerce has been an area where it has failed more than succeeded.
It’s not for lack of trying. Google launched its first shopping-specific search engine, dubbed Froogle, back in 2002. But its cutesy but ambiguous name ended up being only one of many issues with the service.
Then there was the Google Wallet mobile app, whose ability to let shoppers make purchases by tapping their phone against an NFC-enabled checkout device in stores was supposed to be huge. It hasn’t been.
Among its current efforts are a new Google Wallet mobile app product with many more features beyond tap-to-pay; a same-day grocery delivery service called Google Shopping Express; and its Google Shopping search engine, which many e-commerce insiders believe will eventually morph into a full-on shopping marketplace.
One thing that all of these current initiatives and products have in common is the executive overseeing them: Sridhar Ramaswamy. A recent addition to CEO Larry Page’s senior “L Team,” Ramaswamy spent 10 years on Google’s engineering staff before being named SVP of Ads and Commerce in March.
I recently caught up with Ramaswamy at Google’s Mountain View, Calif., campus, where he talked about the future of Google Wallet, the chances of creating an online shopping marketplace to rival Amazon’s and eBay’s, and how a Google-branded physical payments card could make sense.
Here’s an edited version of our conversation:
Jason Del Rey: What should people think when they hear the name “Google Wallet”? For awhile, it was NFC payments. But now there are peer-to-peer payments, loyalty cards and other stuff. What’s the long-term vision?
Sridhar Ramaswamy: Something like NFC tap-and-pay was a well-intentioned bet at the time. Clearly, a lot of deployment still will happen on the merchant side with NFC payments. Some will be driven by the phone and some networks wanting a different model, even if it’s a card tap-and-pay.
Clearly, there are still lots of ecosystem challenges … Still, [Google Wallet] has a decent amount of daily active users. But, in a company where success is measured in big, big numbers, it has not done as well.
[But] we are still bullish on it. We’re working on leadership changes. And this actually predates me, so let me give credit where it’s due: The team also said there’s more to the commerce experience than the final act happening. So, [Google Wallet] now has peer-to-peer payments and support for Wallet Objects. There’s now the larger vision of how do you facilitate commercial actions beyond just the final step.
Passbook has had a head start [on iOS]. But we have a fair amount of adoption. There are some simple use cases, such as storing your AMC number there, or your United number.
Peer-to-peer has a number of use cases we’ve been pleasantly surprised by. I think it’s a multi-pronged approach, but it is with the goal of facilitating payments in multiple ways. The Instant Buy SDK, for example, is really the layer part of Android that makes accepting payments so much easier for an app. It’s a way of greasing the ecosystem.
Google Wallet has the potential to also help your advertising business, right?
That’s a reasonable way to think about it. But the focus is a whole lot more on how can we delight customers, than the indirect effect that it may help the ad business. It will come, but it will come naturally.
The carriers that are backing the ISIS mobile app won’t enable Google Wallet tap-to-pay payments on their phones. Do you see that changing?
I’ve done a lot of partnerships over the years, and sometimes it’s a matter where both sides don’t see enough of a win-win. That is part of some conversations that I’m having now. We’re trying to explain that it does not have to be one-side-takes-all. So I’m optimistic, but sometimes what makes it work is creating an environment where there is progress, and yet both sides win.
Plenty of people in the e-commerce industry are waiting for you to take the next step and just launch your own e-commerce marketplace. When might that happen?
The word “marketplace” has a connotation that is inextricably tied to the evolution to the known marketplaces like Amazon and eBay. Some of which has not really been liked by the large retailers.
The way I think about Google Shopping and Google Shopping Express is in terms of how do we bring value together. So, when I have a conversation with Target, we stress the fact that this is a joint consumer relationship. The customer is co-owned by the retailer and Google.
That’s one of the reasons we’ve been able to bring on a fair number of partners. So, it’s more those kind of things.
We’re not in this to build a blind marketplace where they don’t know anything about what’s going on. They care about their brand and their relationship with the consumer. And we’re working with them to enable a better e-commerce experience, whether it’s GSX [Google Shopping Express], whether it’s done on the phone or desktop. When you start with those principles, you’re much more likely to have a productive relationship with them.
That sounds like a non-answer.
A marketplace needs to have a fair number of participants. We have a very, very successful lead-gen business, and people like it because we deliver customers. The questions we ask ourselves are: “Can we do a better job of delivering leads? Can we do a better job of limiting friction? Rather than building a marketplace, how do we grow local shopping? How do we deliver more consumers to stores?”
I see lot of value in making commerce, on a very large scale, as frictionless as possible, rather than obsessing about things such as “Google needs to have a marketplace.”
Is Google Shopping Express an experiment or the beginning of a long-term business?
It’s a bit early to say, but the kind of user engagement that we see, and the kind of feedback we have seen … have been very, very positive. But, obviously, it’s incredibly challenging to manage for same-day delivery working at this type of scale, operating at retail margins, which can be thin.
I have to say it’s a great start, but not quite a full-fledged business. There’s a serious team working on it that’s incredibly passionate about it, and it’s pretty cool to see.
What is Google’s differentiator?
I think being able to pull this off at scale really depends on two key things, in addition to obvious things like an engaged customer base. Can you actually deliver for a reasonable price? And we use fulfillment from a retail store, so can you actually make that work efficiently at scale?
Both of those things we pay a lot of attention to. We work very closely with retailers to get accurate inventory data. I would say those are really the business differentiators.
On the other hand, on the consumer side, first and foremost this is a team of fanatically dedicated people focused on consumer quality and the quality of the experience you get. I’m very pleased with how the product has done, the attitude of the team and the overall metrics movement.
There are a number of companies that are essentially a little bit like courier services. That’s going to be very hard to scale. And that’s why we invested more in store relationships and things like having up-to-date inventory information.
There was talk of a physical Google card for payments, but then it got shelved. Has that been completely scrapped?
Something like that has to be in the context of what’s the strong value-add that we provide. Things like prepaid-card programs are pretty standard. So, there’s nothing, in theory, wrong with something like that. We’re thinking about it; I would not say it has been ruled out. But we have to make sure that we create the right consumer experience. It has to work overall with Wallet, and we have to look at it and have it make sense.
It seems like a lot of payments companies are focusing first and foremost on getting around or reducing interchange fees more than anything else? Is that the right mindset for innovation in the space?
This is clearly a two-sided coin. On the consumer side, the consumer does not care about interchange. I think, on the consumer side, we have to admit that pulling out a card and swiping it and not even signing in some cases is a five-second deal. So, the No. 1 biggest hurdle on the consumer side is how do you convince them that your scheme is better. That’s the formidable challenge that all new wallet-payment companies face.
On the merchants side, interchange is a big deal. But, if you think about it, things like credit cards and debit cards are the most commonly used physical instruments for payments. Then the question becomes: How do you create value if you’re sitting on something that has an interchange load?
You then have to add value. Payments is just something you do on the way out. The promise of mobile is that it can be a much more continuous experience. That’s sort of how we think about it, at least in our first cut. We’re adding value with offers, with loyalty and convenience, that can mean a great deal for merchants. It’s just a matter of practice.
What do you think of the Apple iBeacon?
I’m a geek, and so I’m very excited about [Bluetooth low-energy]. I think it has a lot of applications, and I think potentially payments is one of them.
There are folks on my team running experiments with it right now … I think it’s a very exciting new tech. And I think [Apple] made a lot of location apps possible that weren’t really possible before. I actually think it has the power to spawn a whole bunch of new applications that we haven’t thought about. Payments may be one of them, but it may be more about identification based on physical proximity.