Cyber Monday Battle: Google Checkout, Paypal and Yahoo Store

November 27, 2007

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This year is excited more than last year because Paypal now has its rival Google Checkout and Yahoo! Store having some problems in these time of the year when all stores and merchant accounts should function 100%. People are hungry to spend their money and stores are welcome them through their coupon codes and many deals.

Google Checkout and PayPal Spend Big to Lure Buyers

Behind the pitched Cyber Monday battle of online retailers is the battle of the payment systems. Both Google Checkout and eBay’s PayPal unveiled generous promotions today to increase their share of holiday spending.

Last year, Google spent heavily on a promotion that offered users as much as $20 off every $50 they spent. Industry executives say Google’s system quickly accounted for more than 10 percent of transactions at sites that offered the deals, but its share fell sharply as soon as the discounts were withdrawn.

This year, Google is offering two frequent-flier miles on any of seven airlines (all the majors except American) for every $1 spent. It also offers $5 to $50 discounts, with minimum purchase, at several dozen merchants. It has deals with CompUSA and Drugstore.com, but not a lot of other major retail brands.

PayPal has fewer merchants but its offer is more lucrative for shoppers in some ways, with 20 percent of purchases credited to the buyer’s PayPal account. And it has more top names including Barnes & Noble, Toys ‘R’ Us, Hewlett Packard and eBags. To prevent people from grabbing too many of these incentives, eBay is capping the rebate at $50 per PayPal account.

It’s not clear that any of these promotions will get more than a handful of people to use either system at sites that take credit cards directly.

“If they can save a few bucks using Google Checkout they’ll use it, but they will revert back to tried and true methods,” said Peter Cobb, the senior vice president at eBags. “PayPal has deeper roots, with the eBay connection, and people are a little more comfortable with it.”

Without promotions, only 2 percent to 5 percent of eBags buyers use Google Checkout, and between 5 percent and 10 percent use PayPal, Mr. Cobb said.

Major sites like eBags have their own systems to store credit card numbers and shipping addresses, so PayPal and Google Checkout do not add that much value for consumers. Things are different for very small sites that use one or the other as their only payment processing method.

These systems do appeal to people who are shy about spreading their credit card numbers around, Mr. Cobb said.

“Retail is about overcoming objections,” he said. “If people want to use a payment method, we will take it.”

But at the end of the day, how much business is either system going to have if they don’t pay people to be their customers?

Source: NYtimes

But Yahoo! Store on Cyber Monday their checkout have been down for the that day (not the whole day but must of it) and some Y!Store members (Sellers) are really pissed off :

Well, you can tell its cyber Monday. Traffic levels go up and Yahoo Store does a melt down. Checkout has been down for close to 3 hours and probably sporadically down for longer than that. You would have thought a giant would be better prepared.

Yes, not only Y! Store but also Commission juction which have put many publisher into LOSS. Big companies should pay more attention to Christmas

Absolute disaster for us…We were having a record weekend and now this…What a disgrace for Yahoo to have issues on one of the most important days of the year. And they have NO ETA as to the fix…

Pathetic..

My store shopping cart has been down for almost 3 hours now. How can Yahoo with over 10,000 merchants have thier entire shopping cart system go down on the busiest day of the year? They should have been prepared for this–evidently they were trying to skimp/save on costs and were underprepared for this. This will cost them in the logn run as many merchants will inevitably leave.

and you can check their official announcement:

Date: 11/26/07

8:31 AM (PST) – Error Message During Checkout

Some merchants are reporting that shoppers are receiving an error message indicating “system unavailable” during the checkout process. We are aware of this issue and are currently investigating. More information will be provided as it becomes available.

Update: 3:56 PM (PST)
We are continuing to investigate this issue at this time. Further updates will be provided as they become available.

Update: 5:12 PM (PST)
We are continuing to investigate this issue and sincerely apologize for the ongoing service interruption for our V3 checkout users (Checkout Manager). Yahoo! engineers and management personnel are working to resolve this matter as quickly as possible. We are currently applying configuration changes intended to improve this issue. Additional information will be provided as it becomes available.

Issue took over 16 hours to resolve (still not all the way resolved). The lack of communication on this one out to merchants was unbelievable. Just complete silence and spin about “some merchants have reported some problems” when in reality it was a complete platform wide outage.

Wow. It will be hard for them and their merchants to recover from this.

From Yahoo’s Status Page:

“Update: 11:06 PM (PST)
At this time, all merchants are able to accept and process orders as expected. We are actively monitoring all systems involved and will provide further updates as necessary.”

Right… now that it’s 11:00 at night the can handle the trickle of traffic. Someone (or lots of someones) at Yahoo got caught sleeping at the wheel and the consequences were catastrophic for tens of thousands of merchants.

Not only is it unacceptable, but it’s completely unbelievable too.

Even CNBC “breaking news” have been featured this issue.

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