For years now, Amazon has been considered the biggest threat to possibly erode Google’s core search-advertising business.
Google’s search business makes the most money when people use it to search for products they intend to buy online.
But a lot of those people are increasingly going straight to Amazon to search for products, bypassing Google’s search ads in their purchasing process.
As more shoppers move to mobile, they often use Amazon’s standalone app to buy things, further pressuring Google’s search business.
And new data from Morgan Stanley suggests the number of Amazon’s app users is growing fast.
As seen in the chart below, Amazon and Walmart saw more than half of its growth in mobile traffic come from app users. That means the mobile shoppers who used to have Google as a starting point on their smartphones are going straight to Amazon apps instead.
Amazon and Walmart get a surprisingly low amount of mobile traffic from web browsers. Morgan Stanley
“Only two retailers – Amazon and Walmart (covered by Simeon Gutman) – drove over 50% of their mobile traffic growth from app users,” Morgan Stanley wrote. “To us, this is positive for these two players as over time we believe larger app audiences can lead to lower long-term customer acquisition costs, stickier customer bases, and a greater share of consumer wallet.
“In addition, given these two players’ size and marketplace structure, this is a potential risk for Google that should be monitored,” it added.
But Morgan Stanley’s note wasn’t all that discouraging for Google. In fact, it noted that Google is in a great position moving forward because the overall mobile-browser traffic is twice the size of the app market, while growing 1.2 times faster. Plus, 30% of the top 30 retailers don’t even have a big enough app user base to be measured yet, reflecting the slow adoption rate of apps in the larger retail market.
Still, the fact that two of the world’s largest retailers, with a combined market cap of nearly $500 billion, are driving more than half of their mobile growth through their own apps is a telling sign of where mobile commerce is headed – and something Google has got to be worried about.
Article by Business Insider.
