Alphabet’s Sundar Pichai: Google ‘Shopping Actions’ Increases Amount Of Purchases By 30 Percent
"The Google Assistant can now help you with over 1 million actions, including new things like reminding you to buy bread when you get to the store or sending money to friends or if you want to get a ride share home," says Pichai. "For a concept we unveiled at I/O less than 2 years ago, this is great progress."
Google parent company Alphabet once again exceeded earnings analysts expectations, but CEO Sundar Pichai was put on the defensive a bit when it came to the amount of money being spent on projects such as artificial intelligence and voice activation.
True to form, Pichai was ready to roll out stats about how well those investments are paying off quickly in terms of being able to drive revenue, even at this early stage.
Specifically, Alphabet’s operating expenses were $10.7 billion — an increase of 27 percent year-over-year, with the biggest increase in R&D expenses reflecting the company’s “continued investment in technical talent,” particularly around hiring people who are creating new advertising products in both the cloud and hardware, as well as the voice activated Google Assistant.
“The Google Assistant is a great example of this,” Pinchai told analysts during the Q1 earnings call (see SeekingAlpha’s earnings transcript). “In the home, we have added over 200 new device partners that work with Assistant just on the last 4 months alone. We now partner with all major manufacturers of connected devices for the home in the U.S.”
Progress On AI Is Paying Off
All told, the Google Assistant can now respond to “over 1 million actions,” Pichai added, including new things like reminding you to buy bread when you get to the store or sending money to friends or if you want to get a ride share home.
“For a concept we unveiled at I/O less than 2 years ago, this is great progress,” he added.
The connection between search and Connected Intelligence represented a key theme that Pinchai and analysts returned to during the call, particularly in the area of advertising and promoting e-commerce.
“We continue to make Google Search and Shopping the best places for people to find and buy products from a range of merchants. We recently announced shopping actions, allowing customers to easily buy from their choice of participating retailers on the Google Assistant and Search with the universal card across mobile, desktop and even Google Home. The results are really helping retailers. Early testing showed that participating retailers see an average increase in basket size of about 30 percent.”
Among the national brands that have formally aligned with Google’s voice-activated virtual assistant to accept spoken orders via the delivery marketplace Google Express, include Panera Bread, Costco, Guitar Center, Kohl’s, L’Occitane, Payless, PetSmart, Road Runner Sports, Sur La Table, Ulta, Walgreens, Amazon’s Whole Foods, and most notably, Walmart’s 4,700 stores.
Pichai also sought to make the case for AI tools in other areas Alphabet and Google are working to expand into, such as health care.
“AI is also unlocking new opportunities for everyone. Just in the last few months, we have seen some amazing applications from dairy farmers in Georgia using TensorFlow to improve the health their herds to our own Google researchers who figured out how to use ML techniques to assess a person’s risk of a heart attack,” Pichai said. “The possibilities of AI in health care are truly exciting.”
Mobile Search Moves The Bar Higher
Alphabet’s revenues were $31 billion, up 26 percent year-over-year. Breaking it down, Google sites’ revenues were $22 billion in the quarter, up 26 percent year-over-year, led again by mobile search.
“On mobile search, for me, mobile obviously raises the bar,” Pichai said. “And if you look at the evolution of Search, we gave from — we evolved to stay ahead of user expectations, and we evolved from just providing links to answers.
“I just feel at a high level the next big evolution we are doing as part of mobile search and assistant is to actually help users complete actions, to help get things done,” he added. “And it’s really hard to do at scale, and that’s the work we are doing. And as we do that, it’ll impact just — not just the Assistant but mobile search more broadly. And obviously, that has a commercial impact as well. So we continue to be very excited about the opportunities there.”
SMBs Are Google’s Bread And Butter
Credit Suisse’s Stephen Ju asked Pichai about Google’s interest in “democratizing advertising with AI to help SMBs who may have found advertising across Google’s ad products to be perhaps overwhelming.”
Asked about greater investment in putting AI in hands of SMBs at the local level, Pichai stressed this will continue to be a primary focus for Google’s ad and marketing products.
“Today, SMBs play a big role in our ecosystem, and we are doing a lot of stuff to support them across the board,” Pichai said. “That includes things in our offerings to help SMBs get an online presence, create a website, be discovered in local, search and Google Maps. So we do a lot of detailed work to make sure SMBs are working well.
“We are also doing a lot of stuff on local as well, including efforts that are even around local services,” he added. “We have very specific initiatives. This is going to be — I mean, it’s actually — to us, it’s bread and butter of what we do here, and so there’s a lot of effort underway, not to mention the fact that we provide G Suite for businesses as they scale up as well. So it’s an end-to-end offering, and we’ll — you’ll continue to see us invest more here.”