Amazon, Google and the Future of Search

“Theory of disappearing layers – as the amount of user attention available to internet services becomes constrained, number of layers in an acceptable user experience moves towards 1.” – Don Richard

A recent study stated that 55% of consumers search Amazon first for products compared to 28% who start with a Google search. In the previous year, 44% of consumers searched Amazon first; Google at 34%. With the rise of Amazon Prime claiming half of American households as customers and growing, this trend should only continue. While these numbers are impressive and speak to the utility of Amazon, there’s something more important. There is a major shift happening in consumer behavior and it will have significant repercussions for not only ecommerce, but search advertising as well.

Aggregating Consumer Trust

Amazon has done an incredible job of becoming the retailer of record in ecommerce. The company has done this by focusing on their speed of customer experience, removing friction in the buying process (via 1-Click), and creating a platform on which third-party vendors are more than happy to sell their wares. In this dynamic there are three key actors: Amazon (market-maker/distributor), third-party vendors (suppliers) and customers. This powerful dynamic falls under Aggregation Theory coined by Ben Thompson of Stratechery. Ben states that under Aggregation Theory,

Suppliers can be aggregated at scale leaving consumers/users as a first order priority. By extension, this means that the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle.

Amazon’s customer-first mindset has translated into an ecommerce behemoth that wins by being the best and most convenient place to buy anything in the world. This has allowed Amazon to amass 300 million customers worldwide, which in turn gave Amazon more power over suppliers in negotiations. Those 300 million customers have also made Amazon a very appealing platform for third-party vendors to sell through, leveraging Amazon’s brand and consumer loyalty. 70% of retailers named Amazon as their top marketplace for sales.

The aforementioned stats around consumer searches aligns with Amazon’s consumer value proposition: the best and most convenient store to buy or search for any product. Amazon has been able to build up so much consumer trust via its ecommerce store, marketplace and ultra-valuable Prime membership, that consumers have begun shift behavior?—?from using a search engine first to relying on Amazon and its one-stop shop. Successfully changing consumer behavior is rare, which makes Amazon’s feat both impressive and indicative of something more important?—?removal of friction in the customer experience.

Removing Friction in Search

Google’s search engine was/is highly successful and profitable because it indexed webpages on the internet, mining each the page for data and information that could be found by a search query. From the consumer perspective, Google searches offered list of results in the form of URL links to websites across the internet.

When consumers were first coming online and learning to use the internet, Google searches represented an intuitive and helpful way to navigate around the web. However, that was before social networks, YouTube, the smartphone and messaging apps. Each one of these innovations fundamentally changed how we experienced the internet, allowing us to access more information and taking up more of our attention in the process.

This is where Amazon’s prowess at removing friction has begun to rear its head. Like other examples of Aggregation Theory (Google included), Amazon has aggregated consumers to Amazon.com by removing friction in the product search and buying process. The typical Amazon Prime customer can search the site, find a product and 1-Click order for same-day shipping, all in a few steps.

Contrast that with the typical Google product search. For consumers, providing a list of options to external URL links in a google search adds a level of friction to the ecommerce experience that is increasingly becoming unacceptable in today’s ondemand world. As consumers become more attention-strapped, wading through Google search results will be seen as a friction-filled experience that maybe avoided all-together. Consumers have shown that they value completing a specific task as quickly as possible over having multiple options to complete the same task.

Search in An AI-Assisted Future

Google is aware of the shifting consumers trends regarding search, which is one of the reasons why the company is focusing on bringing Google Assistantto the Google Pixel (its integrated iPhone competitor) and Google Home (its Amazon Echo competitor) to give users one right answer/complete a specific task. This is a vast departure from Google’s current advertising-based business model for its services and will require a fundamental shift in Google’s culture and attention to consumer experience.

One of the many questions this poses for Google is whether it will be able to get advertisers on-board with a new advertising model which prioritizes a single result to the end consumer. Another question is whether this new business model will be sustainable for Google, given its search model is predicated on advertisers competitively bidding on ads, which greatly increases ad prices and revenue for Google.

Though its unknown whether Google will be able to make this shift, the company has shown that it is more than willing and able to compete in the A.I.-assistant space. The biggest hurdle for Google is the fact that consumer behavior has already shifted to favoring the Amazon model of search, creating considerable behavioral debt for Mountain View to overcome.

It goes without saying that Google has some of the best AI minds in tech and the resources to create the best AI voice assistant. However, as it is often the case in tech, “good enough” routinely trumps “the best” if sufficiently sticky consumer behavior been built up around a “good enough” experience.

Amazon’s high level of consumer trust and prowess for completing a specific task within the confines of its own platform pose a substantial threat to Google and its future in search. The ability to remove layers in the consumer experience frees up both time and attention, making Amazon the preferred retailer in ecommerce and possibly, the preferred platform for all third-party vendor and services in the future. Due to deepening consumer behaviors that Amazon has fostered, it will be set to continue leading not only in ecommerce/mobile commerce, but the A.I. voice assistant space as well with Alexa/Echo.

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