YouTube is now testing shopping features, the company confirmed to WWD, in an intriguing scenario that could transform the video-sharing network into a major social commerce marketplace.
The news broke in media reports Friday, and there are few details available so far. But apparently YouTube creators have been invited to tag products to make items in their videos shoppable. Tagging, the main way most social platforms tie social content to built-in commerce features, would allow the company to track activity and connect to Google e-commerce tools.
A YouTube spokeswoman downplayed the e-commerce angle to WWD, however, describing the goal of the experiment as a way to allow users to discover and learn more about products — essentially to improve the viewer experience. And, she added, the test is being performed in just a limited set of channels.
It’s too early to tell how a launch version of this feature might work, but for now, creators in the test have ultimate control. They can use the tool, or not, and choose which items to feature, she said. Beyond that, she declined comment.
The particulars of the test may not be what’s important, however, particularly at this early stage. What’s more revealing may be how the move extends the company’s retail ambitions.
So far much of the e-commerce momentum among tech giants has revolved around Amazon, Facebook and Facebook-owned Instagram. Google has its own offerings, Google Shopping and Buy on Google, but they haven’t shaped the online retail environment as much as their rivals.
That’s not to say Google isn’t deeply invested in retail. The company provides systems and features for a growing number of online brands and physical stores, and its Cloud division connects cloud services, intelligence products and other high-tech tools to a broad range of retail partners, from fashion start-ups to large big-box chains like Target Corp.
But in the consumer-facing YouTube platform, the parent company may have been sitting on a potentially immense e-commerce contender all along.
Alphabet chief executive officer Sundar Pichai acknowledged as much when he noted in earnings calls that all those unboxing videos, demos and tutorials across the platform look ideal for shopping features.
More than two billion users flock to the platform, which generates revenues of $15 billion a year. YouTube’s popularity has also shown remarkable durability, even before the coronavirus pandemic.
No matter how the winds of social media and video have blown, YouTube has managed to remain a key destination for influencers and the viewing public. Most crucially, the platform’s evolving revenue-sharing model ensures a constant supply of fresh content and new creators. According to YouTube data, the number of channels earning five figures annually grew more than 50 percent year-over-year.
There’s no doubt that the company has been clocking the growth of its video platform against other trends, particularly in social media, which has been increasingly focusing on video.
Recent updates from Snap and Instagram have everything to do with videos. Their latest iterations look like responses to the growing threat from TikTok. YouTube, too, got in on the act with last month’s launch of YouTube Shorts.
All of those rivals and others, including Poshmark, Pinterest and even Amazon, have been actively looking at or launching features that bridge the worlds of video and shopping.
Against that backdrop, it’s easy to see how Google’s video arm would want to take steps into shopping. Add the fact that YouTube earns most of its money through advertisements, a business that has seen budgets slashed during the coronavirus pandemic, and it’s no surprise that it would look to new areas.
Once it decides to flip the e-commerce switch, YouTube could become a mammoth e-commerce channel very quickly. By its count, the number of YouTube channels with more than one million subscribers has already grown by more than 65 percent compared to last year, and people watch more than a billion hours of video and generate billions of views daily.