August 22, 2012, 3:16 PM

The shift to Google Shopping

Retailers prepare for Google’s new comparison shopping service.

Thad Rueter

Senior Editor

Lead Photo

Charlie Hohorst, CEO of CajunGrocer.com, an e-commerce site that features detailed images of various foods and ingredients—reflecting the colorful culture of southern Louisiana—is  enthusiastic about Google Shopping.

Sure, the search giant’s new comparison shopping service is replacing free listings with paid clicks. But those Product Listing Ads that retailers will bid on to take part in Google Shopping will include detailed product images—making them more attractive to Hohorst than simple paid search ads that rely on text and keywords. “Some text can be misleading, but having the ability to view a product image says it all,” he says. “We believe the conversion rate will increase. We’re excited about Google Shopping.”

Google Shopping, introduced in late May and scheduled to supplant Google Product Search in October, is provoking anxiety, confusion and, here and there, enthusiasm among retailers large and small. No one likes it when free becomes paid, but Google Shopping also represents another step for Google in combining search and commerce—essentially, to function not only as a search engine, but as a sales engine.

“The Google Shopping changes are some of the biggest changes in online commerce in some time,” says Mike Effle, CEO of Vendio Services Inc., an e-commerce services provider that helps merchants sell through online marketplaces and comparison shopping sites. By his reckoning, 85% of Vendio’s merchant base, and 80% of merchants in the Internet Retailer Top 500, have provided free product listings to Google’s comparison shopping service, which was called Froogle when it launched in 2002. “A lot of merchants are therefore being affected. These merchants were drawn by an online shopping audience that ranks behind only eBay and Amazon in visits.”

That audience is not likely to disappear—after all, the new Google Shopping listings won’t cost consumers anything to view. And that means retailers will have to learn quickly how to market effectively through Google Shopping, lest they lose sales during the important holiday season.

Merchants buying Product Listing Ads bid on the amount they will pay if their product listings in Google Shopping attract clicks or result in sales—that is, on a cost-per-click or cost-per-acquisition model. Product Listing Ads can include a product’s price, an image and the name of the retailer selling it.

At the same time it rolls out the new comparison shopping format, Google also is encouraging merchants to take part in a host of other e-commerce services, like Google Analytics and Google Trusted Stores, that will help Google solidify its position as a sale-generating and sales-support tool for retailers.

Its Trusted Stores program, for example, serves as a confidence builder and, if needed, a customer service agent. Merchants participating in Trusted Stores, which is free, display a badge on their e-commerce site that shows consumers such customer service data as average on-time shipping rates, along with a guarantee that if an issue arises with the order Google will work with the e-retailer on the customer’s behalf to address the problem. If the issue cannot be resolved, Google promises to reimburse a disgruntled consumer up to $1,000 in lifetime protection. Google monitors merchants to make sure they maintain performance standards; Google says it will monitor a merchant for at least 28 days before that merchant can display a Trusted Store badge.

As Google Shopping gains steam, even retailers not taking part in the comparison shopping program likely will feel its effects, some experts say. That’s because if Google’s vision succeeds and more online shoppers rely on the service, those merchants not taking part will have to find ways to compete with Google’s souped-up sales engine.

“Online retailers that lack the expertise or pocketbook to use Google Shopping profitably will need to double their efforts to improve their businesses through SEO, social marketing and the more defined, fee-driven marketplaces with predictable margins,” says Effle. “Weaker merchants may not survive this transition, but those who do will gain market share.”

For much more about Google Shopping, and how retailers can respond to it, read the upcoming September issue of Internet Retailer magazine.

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