Google Shopping impact on Online Retail Business?

Steve Burns Posted On - September 11, 2012

Google Shopping impact on Online Retail
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It is a change that Google claims will better connect merchants to their consumers, though merchants will now have to pay Google to get into the bandwagon and gain visibility.

Google Shopping will feature Product Listing Ads which were earlier exclusively found on Google Ad words and displayed along with organic listings and Google Product Search Results.

The free lunch is getting over and merchants will now have to pay for their visibility and clicks. So let’s find out what merchants should be aware of to adjust to this new reality.

The transition to Google Shopping is expected to be completed in the US this fall and in the rest of the world by next year. Once the changeover is implemented, browsers will see three types of results on the Search Engine Results Page (SERP) – AdWords ads (paid), Organic results (free) and Shopping Results (paid).

Post the transition it is expected that close to 2/3rds of the search results property will be devoted to paid listings.  The AdWords and Shopping results will feature images that will automatically make them more prominent in the eyes of the browser. This will offer merchants another interesting way in which to engage with the customer.

The net-net result will be that organic listings will get crowded out by display ad types that use graphics to drive home their point.

Despite the obvious fact that paid listings will automatically increase the prices of goods sold through this route, there is good news for 99% of the online merchants. Until now Google Product search used to be completely dominated by the big ticket online retailers like WalMart, eBay, and Amazon. Now every merchant that is willing to pay will have their stores and wares featured on the search results. This will in a way level the playing field, albeit at a cost.

Those who have the knack of discovering niche products and lines of business wherein they can compete with the big boys and still turn in a decent profit will benefit. For example, a small online store selling sports goods can compete with the bigger stores like HealthKart.

In an interesting finding, a Google search for the new Samsung S3 returned results of 19 different retailers with listings, with the big daddies like Amazon, eBay, Verizon etc. not featuring amongst them. This is proof that even in the popular product categories, small retailers can muscle in their way to greater visibility with intelligent advertising, through merchandising and bid optimization.

Time to improve your feed management strategy

The change in Google Shopping will necessitate a re-evaluation in the way merchants judge their feed management and comparison shopping engine investments. Now that comparison shopping listing will cost money, merchants must take an ROI centric look at their investments.

Alexa states that none of the top 30 searches on Google are related to products or shopping. This demonstrates the fact that most merchants use online mass retailers like Amazon or eBay as their true product search engines.

Online merchants should look at Amazon, eBay, Nextag, etc. to list their products if they have not already done so.

Placing a small feed for a high value product is a good way to test a new site for efficacy in driving traffic and sales. Tracking products on different channels will help you take a considered decision about expanding activities in the channel.

Using a multichannel media mix to drive enhanced sales

Merchants who earlier relied on Google Product search to drive traffic will now have to face a difficult choice. Lose traffic or pay for visibility. The best way around this is to analyse the marginal ROI for your spends in every channel and invest in channels that deliver the highest returns.

Will Google Shopping be worthwhile? Only time will answer that question, but merchants will need to be more calculative about their spending, productive ads will warrant more spending and vice versa. Product Listing Ads are tied to Adwords, so merchants should set up automated reports to ensure that they don’t exceed their budgets.

To make up for lost traffic and sales, it is time to get Bing campaigns up and running and look at facebook to increase brand awareness. People who depended on Google Product search will have to search for other free feed channels to make up the traffic numbers. They should bone up on Adwords and paid search as this will be new mantra for success on Google advertising.

On the whole though smaller merchants should be happy that the playing field has been levelled in their favour, albeit at a cost.

This blog is brought to you by a platform that enables you to handle your feeds and get analytics about your performance across multiple marketplaces and comparison shopping engines. We offer both self driven as well as managed solutions that helps online merchants to improve their results.

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