Google closes the gap between online & real-world commerce

The gap between the online environment and the physical retail landscape is narrowing rapidly, a trend that holds some major implications for companies that still think of them as completely separate worlds.

Nowhere is this trend more evident than in a series of aggressive moves that Google has made to position itself in the physical world over the past few months.

Not satisfied with its already dominant role in sending search traffic to websites, the search giant seems increasingly eager to stake a claim in transactions that take place in the physical world.

Just a few months ago, Google officially announced the Google Wallet <> mobile payment service, which is based on Near Field Communication (NFC) technology. The service has received backing from a number of retail and financial services heavyweights in the US including Subway, Macy’s, Walgreens, Toys ‘R Us, First Data, Citibank and MasterCard, plus Sprint on the operator side.

The service, currently being piloted in selected US cities, is compatible with MasterCard’s PayPass contactless payment system. Using the NFC technology, Google Wallet allows a mobile phone to communicate wireless with a point of sale device for secure mobile payments. Essentially, it turns your smartphone into your payment device.

That’s interesting enough on its own, but Google’s ambitions become even clearer when you consider how Google Wallet dovetails with another new Google service called Google Offers <> .

Google Offers delivers an offer of the day to a subscriber’s inbox. When paired with the Wallet, it allows one to redeem offers and build up loyalty points at retailers using your cell phone. In addition to this, the latest beta Offer ads <> , available in adwords, allows an offer coupon to be served up within an advert. This can be initiated on mobile and PC devices, creating two  powerful methods of driving offline transactions. The good news is that this is available in South Africa.

This is just likely to be the beginning, with Google likely to support everything from movie and event tickets to airline boarding passes on its Wallet. For now, these developments are still only in their formative stages. Google Wallet is only available in the United States for now and an international rollout may take some time. What’s more, the number of smartphones and credit cards it supports is very limited as well.

But in time, Google is in a very strong position to become as powerful a facilitator of physical world transactions as it is of online transactions. After all, Google knows probably more about its users through search history, email and the other products it offers than any other company in the world.

South African companies need to be looking at this picture to see what it will mean for them in the longer term. It may be that the critical mass behind African mobile commerce solutions such as M-Pesa will keep Google from competing successfully here.

Or perhaps the regulatory hurdles will be too high. It could even be the case that Google’s model fails outright even in the US and other markets.

But however this plays out, it is becoming increasingly clear that companies should no longer be seeing mobile, online and physical as completely discrete channels.

The companies that will be most successful in the future will be able to close the loop between marketing and commerce across all of these media.

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