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Google Checkout vs. PayPal

Posted by Michael Bloch in ecommerce (Monday February 12, 2007 )

I don’t think CheckOut will be a PayPal killer in the forseeable future, but I’m quite certain they’ll gain a better market share – and the competition between the two online behemoths could translate to lower transaction rates for merchants.

Download the JPMorgan Google Checkout vs. PayPal report (PDF)

Read about the MySpace ecommerce battle

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According to a recent survey; Google Checkout market penetration has reached 6% of online shoppers vs. PayPal’s 42%; but with all due respect to PayPal, CheckOut has only been in operation for a year.

The JPMorgan results published in January 2007 related to a survey of 1100 adults and focused on their online shopping habits in the previous 12 months.

According to the survey, Google Checkout users tend to be young affluent males. 57% of those who had used Google Checkout were under 35 years old and over a third have an income of 75k. This is rather a typical profile of early adopters generally when it comes to technology related goods and services. PayPal users on the other hand tend to be older and average a lower income, indicating an adoption by the “masses”.

While 44% of PayPal users reported a good or very good experience in using PayPal’s services, only 19% of those using Checkout feel the same way – again, probably another sign of a service early in its evolution.

The switchover rate from PayPal to Google CheckOut was only 2.3% of all online shoppers surveyed, with 17.9% stating they would use both services. 43.4% of said they would stick with using PayPal.

If these results are truly indicative of Google Checkout’s performance overall, then I think Google have done very well. PayPal was established in 1998, and really has been the only major player since – we’ve all grown up on the Internet using PayPal; so for Google to achieve this traction in the market in a relatively short space of time, without a huge amount of fanfare, and in what’s a particularly sensitive service industry – it’s quite an achievement.

I think what we’ve seen in the past year is Google tweaking and testing – perhaps it won’t be long before they pull out their big guns and really start hammering merchants and shoppers with CheckOut. The other big possibility on the horizon is the integration of CheckOut with Google Base, with view to a potential MySpace ecommerce deal; which would be absolutely huge for the company.

I don’t think CheckOut will be a PayPal killer in the forseeable future, but I’m quite certain they’ll gain a better market share – and the competition between the two online behemoths could translate to lower transaction rates for merchants.

Download the JPMorgan Google Checkout vs. PayPal report (PDF)

Read about the MySpace ecommerce battle



 

 
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