The Internet was
buzzing last week at the beta launch of Google’s latest service, Google Shopping.
As always, the most recognizable name on the ‘Net is trying to wedge its way
into another industry, but what will this mean for the e-commerce industry?
First of all, it’s important to understand exactly what
Google is up to here, in case you haven’t heard. Essentially, Google is
re-branding its Google Product Search services with a whole new business model.
Soon, only merchants that pay to
advertise with Google will be listed in the company’s product search.
In other words, Google has created a secondary retail-focused
search engine that exclusively features paid advertisers.
However, as far as anyone can tell right now, this will
definitely also play a role in regular search engine results, at least when users
are searching for a specific product (or when a search can be construed as
product-related). When Google presumes that the user has a potential intent to
purchase, they’ll offer up paid (sponsored) listings next to the Web search results, so
that they’re actually the first thing users see. Although the organic results will
remain the same, they will not necessarily be the focal point of the SERPs any longer.
Of course, these product listings are more than just text
ads, as they feature images, descriptions, links to the retailer’s sites and
the current price. All of this is presented as a single, separate experience
from the rest of the search results.
Either multiple product listings
partitioned off in their own “sponsored” box, or a single product can appear on
the right side of the page that includes a more detailed description. The
former is typically designated for more general product searches, while the
latter is reserved for very specific product queries (see examples below).
This practice combines product ads and Google Product
Search, and helps to ensure that the paid listings don’t actually affect the
organic search results – if we’re still calling Google Search organic. While this is all currently in a very experimental beta
period, it's clearly an idea to which Google appears committed.
So, what does this mean for online retail, Google ads and product search?
Well, for one, it will force merchants to keep their ads
up-to-date and accurate, since they are going to be charged as advertising
partners just for the opportunity to list their products. This will be easy for
them, as Google Shopping ads will come complete with an API that merchants can
use to update their listings.
Bidding will be different, as now merchants will no longer
be competing for keywords, but rather bidding how much they’d be willing to
pay, if their listings appear and get clicks or generate conversions. Higher
rankings will then depend on a combination of perceived relevance and the price
of the bid.
Theoretically, these Google Shopping listings will help weed
out redundant or irrelevant results for searchers, making them more enticing to
consumers and, thus, more profitable (or worth the investment) for retailers.
Most of all, this whole scheme seems to be Google’s attempt
to combat major e-commerce retailers, specifically Amazon. Whereas before
Amazon was something of a one-stop shop for consumers looking to buy online,
Google has now presented itself as an (arguably more efficient) alternative,
allowing users to base their purchasing decisions on more product options from
a wider variety of retailers.
This could drastically alter the e-commerce
landscape and give smaller online retailers a much better chance at competing
with the big boys.
Of course, it also runs the risk of shutting out those same smaller businesses that don't have the budget to afford buying product listings. Those companies that survive on the Web largely through the existence of free product search listings could also see some negative effects from this change.
Details are slim at the moment, and there is no official
word on when Google will do away with free product listings, but the company
did state in a blog post that it would like to have Google Shopping
up-and-running by the fall of 2012.
Merchants have two incentives for transitioning to the new
format, a 10-percent monthly credit through 2012 for ads created by August 15,
or a $100 AdWords credit for existing Product Search merchants who fill out a
form by the same date.