Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
Google gains access to consumer goods data with $125 million Channel Intelligence buy.
In a move that could help it play a bigger role in fostering online retail sales, search giant Google Inc. agreed last month to pay $125 million in cash for Channel Intelligence Inc., a company that assists retailers and brand manufacturers in selling their products across the web. Google is acquiring Channel Intelligence from ICG Group Inc.
The acquisition could help Google build stronger ties with major brands, while also bringing Google technology that could help its advertising clients improve conversion rates and shopping cart size—leading to more spending on search, display and video ads, industry analysts say.
"Channel Intelligence is deeply involved with the major brands in the world, and that level of relationship with branded manufacturers who have deep pockets is very compelling to a company like Google," says Sucharita Mulpuru, vice president and principal analyst for e-business at Forrester Research Inc.
Channel Intelligence, whose clients include brand manufacturers 3M and Panasonic, provides technology that lets such companies provide product data to retailers' e-commerce sites and show consumers where they can find products. Channel Intelligence also provides services to retailers to help them sell products through comparison shopping engines and e-marketplaces.
Kevin Lee, CEO of search marketing firm Didit, says Google can benefit from using the vendor's technology to increase the relevancy of online marketing investments.
"Google's strategy is likely one where the CI conversion enhancement products improve both conversion rate and shopping cart size," he says. "That lift in conversion often manifests itself as an increased, or more aggressive, bid in search and more spending on display ads and video media."
Nii Ahene, chief operating officer of CPC Strategy, a firm that helps companies feed their product data to e-marketplaces and comparison shopping engines, says Google will also benefit from Channel Intelligence technology that lets merchants display updated inventory availability with their online product listings. "Channel Intelligence appears to have solved this problem for the likes of Best Buy and Target, so that knowledge is of value to Google, who would love to show that information alongside online pricing on Google Shopping."
The acquisition also positions Google to compete with some companies that it now cooperates with, such as Channel Intelligence competitors ChannelAdvisor Corp. and Mercent.