Is Google Checkout a Dud?

Yesterday, Google announced that it was making its new payment service, Google Checkout, free for merchants through the end of the year.  Upon hearing this news, some commentators jumped to the usual Google conclusion: another brilliant move by an infallible company that will soon put Microsoft, Yahoo, and eBay out of business.  But is this really the right conclusion?

Last summer, you may remember, when Checkout was finally announced (after months of rumors, speculation, and denials that reduced eBay/PayPal shareholders to quivering jello), analysts almost universally concluded that the AdWords/Checkout combination was so potent that PayPal was toast.  Yesterday, while suggesting that the PayPal obituaries were a bit premature, the WSJ noted that Google Checkout had signed up "a few hundred merchants." 

A few hundred?  Unless that number is at least two orders of magnitude too low, the reason Google is making Checkout free is not that it wants to finish eviscerating PayPal, but that Checkout has been an unqualified disaster.  Google has hundreds of thousands of advertisers, the majority of which have web sites that could presumably benefit from Checkout.  Can it really be true that, six months after the PayPal killer was announced, Google has only managed to persuade "hundreds" of these advertisers to try the service?

I don't know the answer--I'm hoping some of you do. 

Comments

[gerber]

I can’t believe it: I’m FIRST! My apologies to King Troll, for from this lofty perch I have come to accept the fundamental truth of his dogma. Now hear this true: at this moment, in every way, you are all my bitches (‘cept you, Henry). This hubris, in all ways morally justified as a result of my uncontested primacy, is sending crashing waves of self-reinforcing serotonin throughout my brain. Ahhh, the ecstasy… I really should have capitalized “bitches,” to reinforce the point…. ahhh….

[John]

When someone is using Paypal there is no good enough reason to start using Google Checkout. It is just another extra work and headache to make another payment system work with e-commerce system. There is also not justification, because not many customers are using Google Checkout. There is no good reason why merchants should jump on this.

[chris]

Someone I know had an experience recently signing up for a seminar using Google Checkout. Somehow it billed her twice at $250 a pop. Then, of course, Google's notoriously hard to reach customer service never got back to her and she had to get the merchant to refund her the original charge just to recoup the double. I wonder how easy they are to use as a developer.

[Victor]

"no good reason" eh john? What about the fact that as an advertiser Google is significantly subsidizing your use of checkout by giving very large adwords credits?

I'm not sure if the advertiser base is only hundreds. I've noticed google's shopping site now uses google checkout and that may be a way of estimating how many businesses use it:

http://froogle.google.com/froogle?sampleq=1&q=diamond+bracelet&lmode=online&checkout=1
the claim of a few hundred seems low to me

[Rick]

So far it's definetly a dud. I have yet to see anyone use it for anything.

However, they haven't done a great job of promoting, either.

[Live Chat]

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[Kris Tuttle]

It's early in the adoption wave. Of course tons of people use PayPal but it's surprising how many of our customers do not yet accept online payment. The success of services like Bill Me Later illustrates the situation. I think Checkout was an experiment for Google like over half of their stuff. Some do stick, some don't. Of the ones that don't some go away and others are revamped with more code and sometimes acquisitions (Docs and Spreadsheets) to come out and try again.

It's more market development than anything else. Thank the press and every hyperventilating blogger for fanning the flames on each wiggle of the technology space.

[Michael Martine]

Google has done a terrible job of explaining what Checkout is and how it works and why anybody should care.

[Mike]

As I see it, there are some pretty significant road blocks to Google Checkout adoption:

1) Not available to vendors of intangible goods such as digital downloads, services, subscriptions, donations, etc. unless your company is tax exempt.

2) Not available to companies without a U.S. bank account and mailing address.

[Mike]

As I see it, there are some pretty significant road blocks to Google Checkout adoption:

1) Not available to vendors of intangible goods such as digital downloads, services, subscriptions, donations, etc. unless your company is tax exempt.

2) Not available to companies without a U.S. bank account and mailing address.

[Ed Dunn]

Paypal success was due to the fact it installed itself into a popular pipleline which was eBay high rate of transactions and guaranteed their service against bogus auctions using their service.

Yahoo and Citibank offered the same service which was really good service but did not have a pipeline or differentiate themselves from Western Union.

And to add to Victor excellent point, Google does a piss-poor job of marketing their products, outsourcing their marketing to self-important, two-bit search watching bloggers and search authors like you all know who.

[sufiy]

Google is still a company with outrages valuation, but all its strength is only in Seach Based Advertisement, all efforts to diversify from One Revenue Stream Business failed so far. After purchasing YouTube all investors has right to grill CEO about what all those PHD are doing, talking out minikitchens?

http://sufiy.blogspot.com/

[sufiy]

Google's TA Double Top Reversal

http://sufiy.blogspot.com/2006/11/google-weekly-chart-multy-year-double.html

[Patrick]

We use both Google Checkout and PayPal on ItsYourTurn.com to process our membership payments. At this point, Google Checkout is definitely inferior to PayPal, in our opinion. Reasons include:

Reliability -- once in a while (at least once a week this happens) it takes an hour or more to approve orders. For instance, just this morning I have an order that's 3 hours old and still waiting to get cleared for payment by Google. For PayPal, this is rarely more than a few minutes, and usually instantaneously except if you pay by eCheck (an option not even available with Google Checkout).

Development -- the development API seems to be more difficult to use than necessary, although it took one experienced programmer only 2 days to write something working. While it appears that the API is extremely customizable, there's very little boilerplate code available, so be prepared to do a lot of custom coding. On the plus side, once it's working, Google is very reliable about sending us the orders correctly.

International orders -- PayPal takes international orders, Google does not.

Doubled orders -- Google seems to have more doubled charges than PayPal. The reason for this is because failed orders are kept in the system and tied into your Google account. For instance, suppose I create a Google Payments account and type in an expired credit card. That order fails, but it's still kept in the system. Then the user puts in a second order with a valid credit card. When that happens, the first failed order is still remembered on the person's Google Account, and it will also get processed. We've contacted Google about this. What we would prefer is that Google alert the person that they have a failed order, and give them the option of canceling or re-submitting. As it is, we've had to write a program that checks for these duplicate orders and asks the person whether they want a refund for it or not (sometimes they buy multiple orders and give away one as a gift, so a doubled order is not always a mistake). It's annoying.

Terms and conditions -- read the page at
https://checkout.google.com/seller/policies.html . Some of these conditions are quite restrictive, and will turn a lot of merchants off. Here's an example: "Buyers using the ecommerce provider's standard checkout flow should not, therefore, encounter a payment field dropdown with Google Checkout listed alongside payment types like Visa, MasterCard, American Express, etc. Instead, the buyer should have the option of selecting Google Checkout as a distinct checkout flow as required in 4b." There's a lot more language similar to this.

-----

On the plus side, as a significant purchaser of AdWords advertising, I get all my Google Payments processing for free (although everyone gets it free until the end of the year). This saves me 2% of my total revenue or more on each transaction. This is a significant savings for us, and thus it's worth it for us to provide Google Payments as an option for our users. We've already processed over 1,000 orders through Google, and for the most part it works just fine. PayPal is still the main payment system for most of our orders.

The "few hundred" number also feels low to me, and I suspect the number will increase once someone (Google perhaps? Now there's an idea!) releases a wrapper for the API that doesn't require expert XML knowledge to get working.

[tclimb]

awesome post sufly. nothing like hearing from someone who actually uses the product. personally, i think they are going after marketshare (i don't sell anything and therefore don't use the product :-)

[Still Inside]

Google first tried to give the product away for "essentially free" by offsetting their new product's fees with discounts on products that their customers buy anyhow.

This is what MSFT did to NSCP back in the browser wars: "use the IE browser (not Netscape) and you'll get a discount on Office and Windows". The DOJ subsequently pressed charges against MSFT for this stunt.

PayPal is no Netscape though. Now that the adoption of this new product is essentially zero, Google is giving away even more money to get it off the ground. Presumibly they will try outright payment of customers next ("customer pays you $10 and you collect $11!").

Perhaps part of reason customers won't invest in a scheme like this is that they are not idiots. They know that if Google has any significant adoption of this product, they can't afford to give money away to every customer. Payment volume on PayPal is something like $40B per year and growing. Two percent of this number is an impossible amount, even for Google.

SI

[robert]

is google boycotting europe ??

although you can sign up as a buyer from nigeria or other
obscure countries, the dropdown is missing countries as:
belgium
france
denmark
switzerland
germany
netherlands

but luxembourg is in .

[jack x]

Really involved in the ecommerce logistics - AND IN NO RUSH to implement Goog checkout.
I agree GERBER>> "There is no good reason why merchants should jump on this."
Goog needs the support of major merchants to make this work. They need to test in a way that will bring major issues to light. It not only needs to satisfy google - by getting (some variation of) a new user - It needs to ensure merchants that customers will be having a worry free experience on the site - just as if they were checking out thru conventional methods. Conventional payment methods along with paypal provide the merchant and the user with an experience that matches necessary criteria. I dont think goog is there yet.

[Cassie]

I used Google Checkout and it has been a disaster!! I ordered 3 items, all were to be here before Christmas. Then I checkedc Toysrus webpage and they only showed I ordered 2 items, Google apparently decided to cancel one of my items and never informed me, now it is too late to order and have my Christmas! Also, they never sent me anything saying my order had been shipped, then when i did get an email it said the UPS tracking # could not be found, I called Toyrus and they don't know where my package is. SO I may get one of my 3 items before Christmas. Between Toysrus and Google Checkout shopping online has been a joke!!

[mike]

The googl checkout is really a garbage one and should be banned. It really sucks.

[jim]

Google check out is an ameturish check out service. I think a bunch of school kids can do a better job. I have never been able to use this service succesfully, the orders are cancelled automatically and in one case google took money from my account even when the order was cancelled. To top it all, the customer service is worst I have seen in my life, I have send a number of messages to customer service but no body replies. This is really a crappy service, you are netter to stay away frim this piece of s***