Google sees potential to earn big bucks by making a change to YouTube

Google has various ways to profit from YouTube. As you know, it sells ads on the streaming video site and even offers a premium version of YouTube for which subscribers pay $11.99 a month (or $17.99 monthly for a family subscription that includes the main subscriber and up to five additional family members). The premium version of YouTube is ad-free and includes free views of original YouTube content.

Google plans on turning YouTube into a shopping mall.

According to Bloomberg, Google is planning on turning YouTube into a giant online shopping mall that will sell devices, products, toys, and items seen in a YouTube video. Instead of browsing through an online mall looking for items to buy, all of those videos available to view on YouTube become a shopping catalog that users can peruse. The whole process, according to those familiar with Google’s thinking, is to allow a user to view videos, find items to purchase, tap on a link and make that purchase. Canadian e-commerce platform Shopify is also part of a test being conducted by Google allowing it to sell items over YouTube.

Google has confirmed that it is testing out this new shopping feature with a limited number of videos. Content creators will be able to decide which products will be listed for sale on their videos. While Google has preferred to sell ads over product, it has seen others increase their revenues by successfully becoming e-commerce leaders. “YouTube is one of the least utilized assets,” according to Andy Ellwood, president of e-commerce startup Basket. “If they decided they want to invest in it, it’s a huge opportunity for them.” How Google plans on taking advantage of this opportunity is unclear. Creators no longer are relying on ads to put bread on the table. In fact, Google is helping YouTube creators sell subscriptions for their content and Google takes a 30% cut of the action.

Not including China, the retail e-commerce market could hit $2.8 trillion by 2025, according to Bloomberg Intelligence. Jitendra Waral, an analyst with Bloomberg Intelligence, points out that “Facebook is ahead in this game. But the sheer size of the e-commerce market and its future growth makes it too big to stay out of.” And YouTube is set to play an important part in the company’s strategy.

During a recent earnings call, Chief Executive Officer Sundar Pichai said that YouTube’s unboxing videos could be turned into a shopping opportunity. In China, the country’s version of TikTok, called Douyin, found success by using videos as a shopping catalog. Hundreds of millions of users purchased smartphones, lipstick, and many other products through videos advertising these items.

Last year, Google started the aforementioned Shopify integration allowing YouTube creators to list up to 12 items for sale on a carousel below their videos. Besides helping creators diversify beyond ads, Google could use the data it collects from merchandising to improve its advertising business.