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Friday, July 27, 2012

Google Shopping to take on Amazon?

In late May 2012, Google Inc. reported on its corporate blog it was revamping Google Product Search into an online marketplace. By fall 2012, Google expects the service, rechristened Google Shopping, will feature merchants' Product Listing Ads embedded directly into search results. Industry participants are split on whether Google Shopping is a step forward or a step back for online commerce. On the May 31 Google blog post, Google Shopping Vice President of Product Management Sameer Samat said the new initiative would improve online shopping by streamlining the process. Instead of having to click several times on entries in Google's search engine to find products and services, shoppers will be able to research purchases, compare products, features and prices, and then connect directly with merchants to make purchases, according to Samat.

Merchants will need to buy Product Listing Ads to be featured in Google Shopping. The ads will appear at the top of search results and will be ranked based on a combination of relevance and bid price, as are Product Listing Ads today, Samat said. (The bid price is the amount merchants are willing to pay Google each time consumers click on their product listings in the search engine.)

"This will give merchants greater control over where their products appear on Google Shopping," Samat added. "Over time they will also have the opportunity to market special offers such as '30 percent off all refracting telescopes.'"

Samat said the transition to a "purely commercial model" for its product search engine will allow Google to deepen its ties with retailers. "We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date," he noted. "Higher quality data – whether it's accurate prices, the latest offers or product availability – should mean better shopping results for users, which in turn should create higher quality traffic for merchants."

Badge of credit

Diane Buzzeo, founder and Chief Executive Officer at e-commerce software firm Ability Commerce, believes Google is aiming for Google Shopping to become an online marketplace to rival Amazon.com.

"Instead of shoppers beginning their search for gifts on Google and clicking through to Amazon listings, they can stay within Google's walls," Buzzeo told The Green Sheet. "Because merchants have to pay for product listings in Google Shopping, Google expects to attract the highest quality inventory with the most accurate data. From a universal Google search alone, shoppers will be able to see product listings with thumbnails, descriptions and sale prices without having to navigate to a separate site."

Another aspect to Google Shopping is its Google Trusted Stores certification program, which could enhance merchant reputations in the eyes of consumers. The service will be implemented as a "badge" displayed next to a merchant's search result listing. The badge provides consumers with "background on merchants – whatever their size – including ratings for on-time shipping and customer service," Samat said.

Buzzeo said merchants apply for Google Trusted Stores status by adding a special Google code to their websites, which allows Google to monitor merchants' shipping and customer service over a 28-day period to determine whether merchants are awarded the trusted store designation.

Costly for small merchants

David Scarpitta, CEO of online discount retailer Das Cheap Inc., characterized Google as becoming a quasi drug dealer with Google Shopping. "They let you try it free, then get people hooked and dependent upon it, and then you are forced to pay in order to survive as normal, " he said in a press release. He added that Das Cheap had already raised certain prices to compensate for the new costs associated with Google Shopping.

Andrew Davis, writing on Search Engine Watch, said Google's paid comparison shopping engine will have a major negative effect for e-commerce merchants. He predicted some small merchants will not adapt fast enough to the new pay model and lose out on traffic and sales. Buzzeo agreed that Google Shopping will cost small merchants; however, she noted that search results will be based on both the relevance of a product to a query and the bid price. That combination could "even the playing field" between small and large merchants, according to Buzzeo.

Wallet integration

Buzzeo expects Google to integrate Google Shopping with its mobile wallet service, Google Wallet. "When shoppers search for and click on a particular product through Google Shopping, a list of online stores that carry the item will appear," she said. "Google then provides search filters for narrowing down these stores, including the option to only show merchants that accept Google Wallet as a method of payment. It's likely this is a precursor to allowing Google Wallet payments directly on the Shopping platform."

It is likely Google will eventually configure its online marketplace to allow the results of all searches to be purchased through Google Wallet, she noted. end of article

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