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12/20/2006
  Google Checkout: What the New York Times missed
There's an NYT article on Google Checkout, covering the success of their massive loss-leading promotion to drive Google Checkout usage this shopping season.

Google is giving away $10 on $30 purchases for customers who use Google Checkout, and this is causing big uptake from merchants. Ebay expert Scot Wingo agrees with the effectiveness of this promotion (Google Checkout's transactions are up over %1200 in Q4 from Q3) - it's definitely attracting eBay sellers to use Google Checkout and eventually AdWords. It's also attracting major sites like Toys R Us, which is promoting Google Checkout as it's top payment method.

I feel a bit vindicated by the positive reception to Google's strategy, because I thought Google Checkout was going to be a big deal from the beginning, especially relating to EBay's community.

Here's what the NYT article misses, and I still think most people don't see: Google will build a distributed "trust" system, much like eBays. The trust system will work across any website, and allow consumers to review which sites are worth buying from. Combined with the knowledge Google will have of people's purchase history, it will make Google Checkout a very strategic long term initiative, and a big problem for eBay and potentially Amazon.

Checkout is really a brilliantly simple move by Google:

  1. Change the credit card processing game by making it free.
  2. Reap the benefits of getting more merchants into AdWords.
  3. Be the source / arbiter of trust in internet commerce.
  4. Own the purchase data for huge numbers of internet buyers.

I think Google Checkout is a key initiative which opens up growth on the needed scale to make an impact on Google's future value.

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