Google Shopping to Charge Retailers for Web Shelf Space

Google is shifting from its free product search model to a new product search engine, Shopping, which will charge retailers who want their products to appear Google product search listings.

The current scenario allows retailers to provide and add information about their products to the search listings for free. Then they are ranked by popularity and price. Under the new Google Shopping, retailers will now be paying for this privilege. Rankings will be determined by merchant bid price and relevance. Google Shopping boxes will show products and feature the paid search results in “sponsored” boxes above the regular search results.

Google hopes to launch Google Shopping this fall. The change is meant to help retailers keep their product listings up to date, providing more opportunities for both the retailers and shoppers. For Google, on the other hand, the new model will hopefully boost profits by “2 to 5 percent over the long term.”

“It would ultimately mean billions more in revenue for Google,” said Mark Ballard, senior research analyst at Rimm-Kaufman Group.

Retailers are taking this news in stride, optimistic that the “change will help fight price erosion and eliminate low-quality merchants”. The change also has positive repercussions to retailer’s bottom lines.

Smaller retailers with budgets that cannot compare to the likes of Amazon, Target and Walmart are the ones expected to take the biggest hit. But this might be good news for consumers.

Abdul continues, “Google shopping is fairly easy to manipulate, and I’ve often searched for a product and landed on an ‘out of stock, consider these instead’ page. I suspect a lot of those never even had the product for sale and were simply looking to capitalize on searches for a major brand’s name so they could offer a lower-priced alternative.”

The distinction between Google Shopping products and other search results is also expected to help the website in legal arguments.
Said Ballard, “This change will probably raise another round of questions about Google, but as long as they clearly label Google Shopping results as sponsored links, as they intend to, I believe they will be in the clear.”