A Google Marketplace? New Google Shopping Is One Indicator

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 the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: Retail | Search & Retail

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About The Author: is CEO and co-founder of CPC Strategy, a full-service data feed and comparison shopping management solution.He has been covering Google Shopping in January 2007, when he began testing title keyword optimization in Google Base data feeds. Since then, he’s helped author more than 3 books on the topic.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



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  • http://twitter.com/mark_barrera Mark Barrera

    Great story highlighting the future of ecommerce.  However, I do want to point out that while you say that this change to charging for Google Shopping hurts some small business, it also serves to help many others.  I have a client who had little visibility in Google shopping when it was a free model since the results were dominated by the big boys with big feeds (Amazon, Walmart, Target, etc).  We spent good time optimizing these feeds to little avail. Now, with the paid model, my client is able to compete and we have seen some of our highest returns (double our typical ROAS) in our paid account coming from these new ad options.  So there is a down side for some, there are also great opportunities for others that I think should be mentioned.

  • http://twitter.com/CPC_Rick Rick Backus

    I 100% agree Mark. I should clarify that this change hurts (unsophisticated) small businesses. For the retailers (small or large) that have a sophisticated bidding strategy, the new Google Shopping is a great opportunity to scale out their paid traffic more aggressively. 

    The question has changed from – “How do I get more traffic from Google Shopping?” to “How do I get more qualified traffic from Google Shopping?”.

  • Trish Keenan

    Isn’t this much the same as when Yahoo! first decided they were going to charge a fee to be listed on their search engine? And shortly thereafter made it an annual fee? Finding a profitable model that keeps customers happy is no easy task, yet if any organization has the adaptability and agility to sort out how to make it work, it’s Google.

  • Nigel Burke

    Wasn’t this just for the Yahoo Directory? and not for the SERPs?

  • http://twitter.com/CPC_Rick Rick Backus

    @google-ec554c159001a6570d750caba0c56839:disqus - I think @google-3a6bc4282da6609a66e256ae68a38db1:disqus was referring to the Yahoo Paid Inclusion program 
    http://searchengineland.com/yahoo-to-drop-paid-inclusion-program-27852

  • http://twitter.com/ContentAxis Content Axis

    It’s very sad that Google is now charging money from companies for clicks that they will get through Google Shopping platform. Still, when we see it from user perspective it will have positive impact on the overall performance of this product. Since Google is investing so much of time, money and energy in developing these products they should get the money from somewhere. Though, I believe that the charged fee should be somewhat less so that Small businesses too can sustain in Google Marketplace.

  • http://twitter.com/ContentAxis Content Axis

    Agreed with @google-3a6bc4282da6609a66e256ae68a38db1:disqus Trish that Google is the only Search Engine that is investing a huge amount of money, time and energy in developing products that can satisfy user at the end of the day. And since they are investing this much money it should come from somewhere, hence I guess it’s fair charging a price on the basis of clicks at the same time however i believe that the charging should be agreeable to Google as well as small businesses which is a debatable issue.

  • Robert Schroeder

    Where does it say - ”Google Trusted Stores 1,000 order / month minimum to qualify for being considered for the program”?

  • UWSseo

    The problem I’m having is that as of July 1st, I discovered, almost totally by chance, that my Google Feed traffic fell to almost zero overnight. No warning from Google that this was coming. I quickly linked the our merchant account with my Adwords account (after searching around for instructions) but so far, after two days, not even an impression! I’m in the wine business and noticed that when I enter a wine product into Google search there are NO Google Shopping results at all, as if our entire industry was somehow just turned off! I can enter other products in other realms and there are Google Shopping results. This is all very frustrating as I see traffic and revenue losses at a significant level (our revenue from the feed was about 8% of our total). If anyone out there has an idea of what is happening I would love to hear it!

  • Robert Schroeder
  • http://www.rimmkaufman.com/ George Michie

    Great article, Rick.  I agree that the stakes have been raised in feed optimization (both the feed itself and the bidding).  I wouldn’t be surprised to see Google have more success as a marketplace than did Nextag.  The huge volume that they enjoy, like Amazon, gives them the ability to take money from two sources:  rev share with the listings, and advertisements along the side.  Another major competitor for resellers of other folks merchandise, potentially.

  • http://twitter.com/CPC_Rick Rick Backus

    You’re right Robert, thanks for catching that. I’ll edit the post. 

  • http://twitter.com/CPC_Rick Rick Backus

    @UWSseo:disqus - @google-82ec2c5a11e85876864a9e5bcbb88cdc:disqus is correct. You can’t purchase ads for alcohol related products. Therefore your products will no longer be eligible for Google Shopping. You should focus on Amazon which still allows bidding on Wine products. 

  • UWSseo

    Wow, you guys are correct, it appears that Google has just destroyed the significant revenue stream for our industry from Google Shopping. And I don’t understand why. We can still use Adwords…it’s just that our ads are listed as “non-Family Friendly” with a few minor restrictions like no graphics in display ads. In reality there is no difference between what was being displayed from the feed and what is being displayed in Google Shopping. I guess our only option is to take those products that were getting the best results in the feed and translate them over to individual product ads in the “regular” Adwords. Hmmm, is Carrie Nations’ grandchild working at Google?

  • http://www.facebook.com/dmitry.pakhomkin Dmitry Pakhomkin

    Google Shopping is not the only shopping search engine out there. And clearly not the most comprehensive. And now it’s not free. Hm…

  • http://twitter.com/MaryKayLofurno Mary Kay Lofurno

    Interesting article.  Funny you said local fulfillment through local merchants, or at least that is what I took it to mean.  There has been a lot in the news lately about Amazon loosing its tax advantage and will start charging tax.  One article asked why Amazon once fought this aggressively and then stopped fighting.  Their supposition was because this would give them nexus in each of those states.  And that Amazon would be setting up local distribution centers so they could also do same or next day delivery.  They also pointed to Amazon’s purchase of Kiva Systems [a robotics company develops smart shipping/warehouses using robots]

    All that said, each side/strategy {Google vs. Amazon} has its pros and cons.  When it comes to setting up warehouses and distribution centers for same day delivery, I would have to side with Amazon here.  Its more in their wheelhouse.

    Granted, Google has done a lot to beef up its local presence but embarking on this type of program [local fulfillment through local merchants] seems like it has a host of different issues associated with it that are not in say Google’s wheelhouse.  [I apologize for the use of wheelhouse/buzz word]

    Just my opinion. Thanks, Mary Kay

  • Billteud

    So now when I search for products, instead of getting the most appropriate results that benefit me, I’m going to get results from your “client” who couldn’t scam their way to the top, so they just paid to be placed there instead.

  • Jerrywhyte

    G wants to kill internet its entirety with most of their self-centered products and brands that sucks

  • Joe G

    I am not that much concerned that it is PPC, but that it is big. Overstock.com etc. already dominate, not based on quality merchandise or content but due to large amount of Google advertising.

    Explain to me this: how does it BENEFIT CONSUMERS when product listings are not based on price competitiveness, shipping, taxes or product description but product listings are based on how much a merchant pays Google.

    It’s just them preparing to take on Amazon again. And probably fail again. Google should stick to what it does best: be a search engine.

 

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