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Monday, February 13, 2006

Gbuy - What Every Website Owner Must Know

Every month, it seems, a major company stares down the barrel of Google's brand recognition gun. The company of the month right now happens to be PayPal. The Wall Street Journal published an article on Ebay's Jeff Jordan's preparations for Gbuy, the so called PayPal killer (PayPal is owned by Ebay). Many news sources and blogs are anticipating Gbuy to quickly become a PayPal killer given Google's huge brand name recognition and reach with consumers.

But the whole PayPal killing talk is really much ado about nothing. I have no doubt whatsoever that Google will release Gbuy, but I do have significant doubts as to whether it will actually replace PayPal as many merchant's payment processor of choice. Given Google's recent releases, and given how PayPal has positioned itself in the marketplace, I would not be surprised of Gbuy proves itself to be a significant flop considering all the attention it has been given.

PayPal's Vulnerability

Jeff Jordan of Ebay has every right to be scared, however. Executives have a history of losing their dignity and control when they feel pressured by Google. Steve Ballmer is well known for his professional wrestling-like tirade in which he sent chairs flying and cursed the name of Google, and Yahoo is not much better having publicly given up its quest for search dominance, which in effect was Yahoo executives crying "Uncle!" with the hope that they could finally focus on something that they could actually excel in.

Professional wrestling rant's aside, Jeff Jordan does have reason to be worried. PayPal, unlike Yahoo and Microsoft, is much more vulnerable to a direct attack from Google. The history of PayPal is filled with trouble with CEO's, run-ins with the mafia, and pressure from an Attorney General. This article, however, is not the place for a lesson on the history of PayPal (a book was written for that), regardless of how fascinating it might be.

Article Tip
Did you know that PayPal is one of the few companies with a single letter domain name? Chëck it out: X.com.

The problem with PayPal is that it has not solidified itself in any other market besides the payment option of eBay merchants. The result is that many website owners view PayPal as a 'cheap' option. Furthermore, even though PayPal does allow non-members to purchase items through their system, it is not as easy as many merchant's would like. Many of the problems of PayPal were actually discussed on the forums a while ago.

These problems open up a vulnerability for PayPal. If Google releases a product that improves on the downfalls of PayPal in much the same way that they were able to revolutionize online maps, then PayPal should be worried. Google does have a knack for making web applications that make existing applications look outdated and simplistic.

Why Gbuy Will Not Kill PayPal

Experts have been predicting the wild success of Google in many different industries for some time. When Froogle was released it was thought by many to be a major threat to Amazon.com. Although Gmail has been a success, there have been no reports of Yahoo Mail suffering significant attrition (in fact the buzz over the new Yahoo Mail interface shows just how much interest there is in Yahoo Mail). And although Google News is a highly useful service, it is hardly considered the default news service for most web users.

The fact is, the past few Google releases have been relative failures. Google admitted that they screwed up with their video service (the Apple iPod Video is much more successful and sets the bar much higher than Google is currently meeting). Google Reader was met with a collective 'ho-hum' from the webmaster community (as was Google Pack), and even though Google Sitemaps may be useful, it is still under used. Google Analytics still is not able to accommodate mass signups, and the buzz over analytics has also declined significantly since its release.

Really, if we were to look at Google's recent releases, the only relatively successful releases have been Google's Search (obviously), Adwords and Adsense (also obvious), Google Maps, and Gmail. The fact is, with the exception of Adwords and Adsense, Google has not been very successful in launching commercial products.

Google's Lack of Simplicity for 'Everyday' Users

The problem with most of Google's recent releases has been its lack of simplicity. Google's initial success in search was powered by the extreme simplicity they brought to the process. All the user saw was a search box and search results. What could be more simple? On top of that, search results were stunningly accurate compared to the other results available.

Although Adwords is confusing to many website owners, Adsense also carries the trait of being extraordinarily simple. Add in the benefit of being able to make a significant income from Adsense and it is no wonder that Google has a firm hold on the contextual ad market. For potential advertisers there is no greater reach than Google Adwords.

Yet most of Google's recent releases have either lacked the simplicity that made them the choice for every day users or offer no significant advantages over existing products. If PayPal is genuinely going to be threated by Gbuy, then Google is going to have to perfect the simplicity that PayPal has capitalized on.

Gbuy - Finding a Niche Among Website Owners

A few years back when K-Mart filed for bänkruptcy, I remember listening to an analysis which looked at the reasons why K-Mart was having difficulty. The analyst explained how there were three major players in the mega-stores: Wal-Mart, K-Mart, and Target. Wal-Mart had successfully positioned itself as the price-leader out of the three mega-stores while Target, although still inexpensive, positioned itself as slightly more expensive, but higher quality. K-Mart, in this environment, lacked an identity to shoppers.

Gbuy could very well fall into the same problem. PayPal has done a great job in solidifying itself as the payment solution of choice for millïons of Ebay merchants. In addition, thousands of other website owners have chosen to at least add PayPal as a payment option on their website due to its extreme simplicity for those who have PayPal accounts.

In a best case scenario Gbuy could really only hope to fit in as an alternate payment system to those who have already established how users are supposed to pay for their goods. In all reality, though, the market is crowded, and Ebay users will likely continue to use the integrated, easy to use PayPal over any new-commer - especially of Google fails to make a relatively simple product.


About The Author
Mark Daoust is the owner of Site Reference. If you want to reference this article, please reference it at its original published location.

posted by Scott Jones @ 9:59 am

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