Google Shopping: Bidding Your Way to the Customer’s Wallet

By now, everyone in the e-commerce world is aware of yet another disruptive force introduced by Google (or rather re-packaged and reintroduced). This one is called Google Shopping and Google wants to build a better shopping experience for consumers through this offer targeted at e-commerce merchants. In simple words, for the US market, Google product search is being converted into Google Shopping. This is based on creating product listing ads available as a service in Google Adwords. Google Shopping is a commercial offering, which means that there are no longer freebies available for merchants to list their products. It has to be paid for or bid for in a similar fashion to bidding keywords for running Adwords campaigns, except that in this case the bidding is for a “product target”. The details on how Google Shopping has been built can be read in the below blog by Sameer Samat, VP of Product Management at Google:

Now, Google Shopping has been panned by critics who call it as dangerous for small businesses who cannot outbid their rival large retailers and hence would lose out on the race to gain prominence in Google search. Given the cost of clicks can range from $1 and upwards, there is some truth to why this doesn’t work well for a small e-commerce player trying to gain some prominence in listing products through Google search. But, this program is very similar to the much familiar keywords bidding process used in Adwords. Several e-commerce players have used a combination of SEO and Adword campaigns to gain customers over the years. It is true that keyword bidding has become an expensive affair as more and more competition has started bidding for much sought after keywords. This would probably be the case with product targets too that drive Google shopping. But, one needs to realize that bidding and participating in Google Shopping is not the beginning and end of gaining access to a customer. It is a so-called “privileged” access to customers by merchants who can afford to spend a little to get a customer. This is no different from every practice that one can see outside in the business world.

When a customer searches for a product on Google, he is by and large still in the “discovery” or “research” mode. While providing additional information like price at this stage is definitely an “influencer”, it is by no means driving a purchase decision in favor of a particular retailer. A small retailer losing out on a bid to display their products in a prominent yet constrained real estate space once occupied by Adwords ads is in itself not going to displace the merchant and steal his business. An e-commerce retailer needs to focus on customer acquisition for sure but his core focus should be on building strong business fundamentals – better operational efficiency and better sourcing of products. What Google is doing here is merely allow potential customers have an additional look at products sold by a specific set of merchants. Why would Google want to do so? Because it is the gatekeeper of every potential customer that can be acquired by an e-retailer in this world. As a gatekeeper, Google does not want to just allow customers pass the gate, they want to streamline that crowd as much as possible so that they reach the right destination. It is just that in order to do, they are charging an entry fee. This entry fee is not being collected from the customers, but the merchants waiting to grab hold of those customers and do business with. While I would prefer everything to be free in this World, the reality is that this isn’t unfair either.

Would it lead to a loss for merchants who cannot afford to pay the fees required to get customers to their shop? Yes, it may. But, customers in a mature market like the US are self-trained to research through several combinations of steps. These steps may be reduced, but they are never going be to easily replaced even by Google. Some of them are-

  • Check Google to see which merchant is carrying a product
  • Research the product on (or another top e-commerce player) for understanding more about product features
  • Check Google for websites that offer additional information on product attributes, user feedback, social feedback etc.
  • Check price of the product (base price + shipping) in multiple websites including Google shopping
  • Check the website (if not familiar) to see if it is trustworthy or not. Check for ease of checkout without any annoying roadblocks (bad UI, unwanted questions, unwanted steps – no guest checkout!?) and then finally make the purchase.
  • This is then followed by yet another Google search over the next few days to see if the product was purchased at a good deal (mitigating buyer’s remorse) and there were no price changes or unknown aspects of the product (user feedback) that were not captured earlier before purchase.
While Google is simplifying this process so that the customer reaches an e-commerce store faster, it will not eliminate all the steps. This in turn can help merchants with less money to spend on customer acquisition depend on these additional channels to capture customers.

Alternately, doing the same search for a product directly in Google Shopping is however different. A customer intent while inside Google Shopping is different from just being on Google. Here the customer is more than just doing “research” and if need be, will go to a e-commerce player offering the same product for a competitive price and complete their purchase with them. This is where the Google Shopping page is more powerful as an influence on customer purchase decision than the regular search. This is also where Google hasn’t invested as much product knowledge in drastically improving the product discovery and purchase decision mechanisms so that customers don’t bounce from Google Shopping and go elsewhere other than an e-commerce merchant. Product images are sloppy, product description isn’t motivational enough and speed of delivery, a major factor along with free shipping for driving purchase decisions is not displayed. This is by far a problem inherent with Google’s dependency on quality data from merchants in order to fuel the Google Shopping experience. Having worked with a big e-commerce player like with regards to data feeds, I also know how tremendously challenging it is for even an established retailer to provide all the necessary data points required to make Google Shopping a great experience.

Now, if Google’s focus is on Google Shopping, what can small e-commerce players do to improve their business through product ad list bidding? Well, for starters, all that a small merchant needs to do is just bid at least at a bare minimum price for key product types (brand or category or ad group etc.) so that they are included in the Google Shopping program. What also needs to be done is to maintain a high level of product quality so that data is always fresh and matches with data on the merchant website so that Google doesn’t reject the product for listing. Bidding high to get a premium seat is best left to the big guys unless you are a niche player in the market with products that maybe a Walmart or an Amazon (highly unlikely) doesn’t sell. Customers will definitely make an additional click to navigate and view additional search results in Google Shopping to nail down their purchase options (this is a hypothesis and I hope will be tested right). At a bare minimum, they will filter the options presented based on total price or other attributes and hence get to view a competitive offering.

Not finding yourself in the regular Google search product display because of poor bidding will turn out to be a major downfall only after Google has mastered all the e-commerce retailers and their data. This is practically impossible and will take a couple of years for Google to get it right (it can eventually happen though!). Google Shopping will turn out to be a huge profit driver or enough of one so that the company is no longer dependent on Adwords as the only key source for its long-term growth.

Check this link to understand how product ad list works:

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