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How Google Shopping Will Shape Internet Retailer Strategies

Posted on June 21, 2012 by Josh Mc

Recently, search engine giant Google made headlines with their decision to switch their Google product search to an all-inclusive paid service that will be known as Google Shopping. Given how deeply Google impacts every market they touch, this change to a paid service is sure to have a drastic impact on the internet economy as a whole.

The change itself will take what has been a free service for almost a decade and make it into a pay to play product, thus limiting the amount of people that can take part and use the service to only those that can afford it. Google says this change will be rolling out over the next couple of months.

Under the new model, users will be able to submit the traditional feed and pay Google a percentage of the sale that results from the click. Not the same as the pay per click model where you pay regardless of whether you make a sale, but it does cost money from every sale that Google Shopping sends.

The change is poised to make a huge difference as ecommerce companies could have been making 100 to 100,000 dollars a month on this product without paying Google anything. Now they will be paying a percentage on every piece that is sold through the service. The change figures to be good news for the larger companies though, who are often already seeing higher conversions from their Google Product Ads, the service they are combining into Google Shopping, and can easily transfer over the increased budget as they should have less competition.

While in the long term companies will be paying a lot for the service, it does have a potential benefit for small companies in the short term. With all the changes and companies moving in and out of the system there is a chance that the competition will be a lot lower in the onset of this launch, thus allowing your company to have a better chance of converting the customer. Smaller companies that are just starting out and have no organic rankings, can still take advantage of Google shopping to gain exposure by concentrating efforts on the categories in which they feel they are strongest; however, they will no longer be able to get free traffic from Google for this, so they will need to really think about what products they decide to list.

The new format for Google Shopping is designed to provide another way for retailers to strategize and increase sales and internet presence within Google itself. While the pay model appears to benefit only the largest companies at first glance, smaller retailers will still be able to receive ample placement on the site with a little research and planning.  It is easy to see the revenue benefit for Google in this but a lot harder to see how it really benefits the user. This is an important story to follow as Google has always been against this type of paid inclusion that they are now embracing, so it will be really interesting to see what happens as a result of this change.

What are your thoughts on this significant change?

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