Alphabet Expands Its Shopify E-commerce Partnership

Alphabet (GOOGL) hopes to woo more online sellers to its platform through its expanded e-commerce collaboration with Shopify (SHOP).

The partnership could potentially bolster Google’s ad business, as the data it gathers from its bolstered shopping platform will populate its new technology, the Shopping Graph. The Shopping Graph uses AI to significantly speed up the rate at which shoppers find searched-for items.

At its 2021 annual developer conference, Google announced it has expedited the process for Shopify’s 1.7 million merchants to feature their products across its digital platforms. Merchants will be able to sign up to have their products appear in places such as Google Search, Google Shopping, Google Images, Google Lens, and YouTube. The move will give Shopify sellers greater exposure to more high-intent shoppers.

Google is Alphabet’s largest unit, and it primarily makes money through digital advertising. Shopify operates a platform where a diverse range of businesses can set up and operate online shops.

“We want to help people discover, learn about and shop for the products they love,” said Google’s commerce and payments chief Bill Ready.

The expanded Shopify partnership builds on Google’s previous step of eliminating listing fees in a bid to attract more merchants to its platform. Making it free for merchants to sell their products across Google led to a 70% increase in product listings and an 80% rise in the number of merchants on its platform. (See Alphabet stock analysis on TipRanks)

Monness analyst Brian White maintained a Buy rating with a price target of $3,000 on Alphabet stock. The analyst’s price target implies 32.60% upside potential.

“We believe Alphabet is well positioned for a continued recovery in digital ad spending in 2021,” said White.

Consensus among analysts on Wall Street is a Strong Buy based on 26 Buy and 2 Hold ratings. The average analyst price target of $2,778.32 suggests 22.80% upside potential over current levels.

GOOGL scores a “Perfect 10” on TipRanks’ Smart Score rating system, implying the stock is likely to outperform the market.

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