As U.S. stores recover from double-digit losses caused by COVID-19 lockdowns, Alphabet Inc.’s Google Cloud division is expecting a surge in fourth-quarter sales as the country’s retailers brace for record online holiday shopping.
Stores depend on cloud technology for its eCommerce infrastructure to host websites and store data. Since fees are often pegged to site traffic, a jump in activity will drive up revenue for the unit.
The vice president of retail and consumer told the news service that her team tossed its original linear growth model to predict how many servers it will need to process web orders for retailers on Black Friday.
It could be a boon for Google Cloud, which has generated nearly a third of its revenue during the fourth quarter in 2018 and 2019.
Wayfair Inc. and Kohl’s Corp. lean on Google months in advance of the biggest shopping weekend of the year to make sure it has enough servers to withstand increased shopping during holiday discount days that also includes Cyber Monday in November and December.
Tharp said demand has flooded shops since March, when the U.S. commenced lockdowns. The holidays are expected to boost demand further, as retailers including Walmart Inc. and Target Corp. have said they will reduce in-store hours because of coronavirus concerns.
Tharp said the pandemic has already benefited Google Cloud, with some retailers adopting its predictive algorithms years ahead of plan to help them work out the most efficient way of fulfilling orders.
On Tuesday (Aug. 4) Best Buy Co. Inc. announced a multi-year deal to centralize customer and product data with Google Cloud to improve its loyalty program and online ad campaigns.
Terms of the deal were not disclosed, but Tharp told Reuters she hopes it leads to Google eventually powering Best Buy’s web ordering system.
Last week, Alphabet said it strengthened its advertising capabilities in the second quarter as it looked to help connect business with customers through new features amid the pandemic.
“We’re working to help people, businesses and communities in these uncertain times,” Sundar Pichai, CEO of Google and Alphabet said in a statement. “As people increasingly turn to online services, our platforms, from Cloud to Google Play to YouTube, are helping our partners provide important services and support their businesses.”