Imagine if Mall of America had unlimited space and let all merchants setup shop for free.

Now imagine if Mall of America abruptly changed their business model and told each merchant they would have to pay rent based on how much foot traffic each of their stores get.

This is a reality online merchants face after Google Shopping, the largest comparison shopping site online, announced it would be transferring to a pay-to-play product comparison site.

Many merchants are leaving the marketing channel completely. Most will stay and pick up the increased demand caused by the vacuum of smaller merchants out of the program.

So far bids are ranging around 40 – 50 cents. So you can imagine if a small business was getting 500 clicks per month from Google Shopping, and now they bid around 40 cents per clicks, that’s an added expense of $2400 per year to, in an industry where margins have been decreasing for years now.

Many retailers will have to start writing bigger checks, paying more than $100,000 / year to Google while some like Amazon, eBay and Walmart will face a difficult decision – either cut Google a 7 figure check each year or “give away” the market share that was previously free.

 

Google Tip-Toeing Into Ecommerce

The new Google Shopping and Google’s release of Google Trusted Stores may seem like small moves to the average eye but ecommerce experts see a major shift on the horizon: Google competing directly with Amazon.

Amazon, the online retail giant that accounts for more than 1/3 of all purchases online, now owes Google a pretty penny in margins for thousands of sales per year generated by Amazon products in Google’s Shopping program.

The next move we think Google will make is a more secure full-service online store experience for consumers. But probably not a Google Marketplace as some suspect (even though the new Google Shopping gives sellers the option to pay only for sales, not clicks).

Another indicator is Google’s new Trusted Stores program that gives Google direct access to merchant order and cancellation information, as well as direct access to online retail customer support teams and the merchant’s customers themselves.

The retailers that participate in this program, all who are required to sustain specific customer service standards and capture more than 1,000 transactions per month (at the disgust of quality smaller merchants) will surely see some form of benefits in search engine rankings, if not directly then through the addition of future Google Trusted Stores rich snippet markup in SERPs.

So what is Google’s ace in the whole?

Google may be actively pursuing local-availability product fulfillment, a space where Google local search has an edge on Amazon. Being able to fulfill product orders to your doorstep on the same day would be a huge move by Google and threaten Amazon’s 2 day Amazon Prime shipping program and could make Google a fulfillment powerhouse, charging merchants for direct local delivery access and online access through search to consumers.

I can picture it now: fleets of robotic controlled Google cars delivering products across the globe. A little farfetched? Maybe. Maybe not.

The Google Marketplace: Why Not?

The argument against Google creating its own marketplace rests on the assumption that Google does not want to damage its main source of revenue – ads. Moving into a marketplace model would lock sellers in at a set CPA, potentially giving up placement in SERPs that were once held by ads.

CPC ad programs have traditionally been more profitable for the owners of those programs. Nextag, a long-held opponent to Google’s increasing aggression towards content-aggregation sites, attempted a marketplace model on Nextag not too long ago with benefits to the merchants who used the program, but at a loss in ad revenue to Nextag.

This is one of the major reasons why we think Google will stay the course with its ad-based programs but offer a level of fulfillment unheard of in today’s ecommerce world.

The Small Business Online Retailer: Forever Forgotten?

Small businesses who relied on Google Shopping as a major source of free traffic and sales are hardest hit by the new Google Shopping.

Some major questions they are asking include:

  1. Can I manage this program in house? Do I have the technical and time resources available to update ad_groups and CPC bids multiple times a week?
  2. Do I have the technical expertise to tease out top performing products and brands through Google Analytics to optimize my campaigns?
  3. Will the money I lose on margins for each sale make this shopping channel worth my time?
  4. What traffic source will help mitigate for this loss?
  5. Does the Google Trusted Stores 100 orders / month minimum to qualify for being considered for the program further hurt my ability to rank for product searches in Google?

Definitely some hard questions to answer but one thing is for certain, retailers who rely on Google as a major lifeline to their online store are now looking for other cost effective ways to get traffic to their businesses. And this creates a lot of potential opportunities for existing & new Internet entities.

SEOs: Forever Alone?

It’s been a tough few weeks for some SEOs who are still grappling with the fact that very few organic results will be above the fold for transactional search queries.

For most SEOs I talk to, even before the Google Shopping switch, a majority of their work was not with ecommerce clients in the first place, but this is another strain on businesses built around optimizing the placement of organic listings which have been decreasing in visibility consistently over time.

Search Engine Marketing: A Shift

A couple of weeks ago on #ppcchat we were lucky enough to join the conversation about Google Shopping. One thing that was clear was that most paid search marketers didn’t know much about data feeds or data feed manipulation.

We predict that to soon change. For marketers dealing with ecommerce clients understanding how a data feed works and being an expert at how to manipulate and maintain it will be just as important as optimizing Product Listing Ad bids.


Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.


About The Author

Rick Backus is the CEO of CPC Strategy. As an industry expert on ecommerce and retail search, he has spoken at national conferences including IRCE, SearchLove, and SES. Today, Rick focuses his efforts on being the industry authority on the Google Product Listing Ads program.

 

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