Yesterday, Google made an astonishing move by announcing that eCommerce companies will be able to list their products for free on Google Shopping. In a blog post published by Bill Ready, Google’s President of Commerce, he announced that in light of the current global pandemic Google will be “advancing our plans to make it free for merchants to sell on Google”. So let’s break this down…
What is Google Shopping?
Google Shopping is the product based search results section that you see at the top of Google search when searching for an item. You can also find more Google Shopping listings by clicking the ‘Shopping’ tab on Google search, this will bring up all of the listings that match your search query. The products that currently appear in these sections have all been placed there by advertisers. The advertisers bid on their product in Google Ads in order to rank them higher and compete with other listings.
These Google Shopping Ads are a significant part of many eCommerce businesses advertising budget, especially those that sell highly competitive products like technology and clothing. So, by making the majority of these listings free will be widely welcomed by most businesses however it could create an extremely competitive battle for the sponsored top section.
What will Change & When?
So, just to be clear, Google isn’t completely removing Shopping ads. Shopping ads will still exist as they do now at the top of standard search results and within the very top section of shopping results, it’s just the remainder of the shopping results page which will be filled with free shopping listings. Essentially, this is the same model that standard search works on; paid search results at the top, organic search results below.
In the blog post, Bill Ready states that “changes will take effect in the U.S. before the end of April” so we could see ‘free shopping listings’ in the US by next week! As for the UK, or even the rest of the world, the timeline is fairly unknown as they “aim to expand this globally before the end of the year”. Knowing Google, this will likely be rolled out to each country in order of the market size, hence why the US is first; being the largest search market for Google.
Interestingly, free Shopping Listings appear to have been within Google’s roadmap and wasn’t born out of the current global pandemic; although this has ‘advanced’ their plans. Maybe the decision to always make Shopping Listings free was influenced by the record £2.1bn fine the EU hit Google with back in 2017.
How Do You Get Access Free Google Shopping Listings?
Of course, you can currently only take advantage of this if you sell products in the US but it’s good to know for when it goes live in the UK as the steps should be the same. The official Google Blog Post states “if you’re an existing user of Merchant Center and Shopping ads, you don’t have to do anything to take advantage of the free listings”. However, after reading through Google’s help articles on the subject I’ve found this to be incorrect.
In this Google help article, it mentions that to take advantage of the free shopping listings, you need to submit your existing product feeds into the ‘surfaces across Google’ program, of which links to another help article.
I recommend you read through both of the help articles in detail to fully understand what you need to do, but in short, here is the step by step process.
Steps to access Free Google Shopping Listings
- Open your Google Merchant Centre, if you don’t have one then create one for free here… https://www.google.com/retail/solutions/merchant-center/
- For now, you need to have a feed that has ‘United States’ as a country that you deliver to (until Google rolls this out to more countries). If you don’t have this then you to either need to add the ‘United States’ to your current feed or create a new product feed. If you need to create a new product feed then you may need to ask your website developer to do this.
- Click ‘Growth’ on the left-hand panel, click ‘Manage Programs’, find the ‘Surfaces across Google’ tile and ‘Enable’ it.
- Now you need to submit your ‘United States‘ feed to the ‘Surfaces across Google‘ destination, to do this go to your ‘Feeds‘, click your feed name, click ‘Settings‘, click ‘United States‘ and tick ‘Surfaces across Google‘, save.
- Go back to ‘Growth‘, ‘Surfaces across Google‘, ‘Continue‘
- You should see your feed is processing. Complete the ‘TAX‘, ‘Shipping‘, ‘Website‘ and ‘Shipping policy link‘ fields on that page.
- Finally, read and accept the ‘surfaces across Google policies’ and you’re good to go!
PayPal? What Do They Have To Do With It?
In the blog post from Google, Bill Ready says, “We’re also kicking off a new partnership with PayPal to allow merchants to link their accounts” this is to “speed up our onboarding process and ensure we’re surfacing the highest quality results for our users”. This partnership doesn’t make sense at first glance. Google Merchant is a product inventory publisher and PayPal is a payment processor so they don’t go hand-in-hand like eCommerce inventory platforms such as Shopify, Magento and BigCommerce.
However, when you search deeper, you may notice that Bill Ready was previously COO at PayPal before he moved to President of Commerce at Google. Bill also goes on to say “we’re continuing to work closely with many of our existing partners that help merchants manage their products and inventory, including Shopify, WooCommerce, and BigCommerce”. Then lastly considering the whole purpose of Google Shopping is to make shopping online quicker and easier for consumers, it starts to paint a slightly clearer picture…
My guess is that Google will integrate PayPal and eCommerce platforms (Shopify, Magento, etc) together into Google Shopping as a direct and instant way to purchase a product within Google Search and without the need to load the retailer’s site. With this in place, they will likely take a small percentage of the sale (shared with PayPal) for processing the payment, and so forth ‘free Google Shopping listings’ become more profitable for Google than the current pay-per-click ad model.
Will Google Still Make Money?
If my theory above becomes true then this move is unlikely to affect Google’s bottom line in the long run, if anything is a more profitable model. Rather than taking £0.12 per click, for example, they could end up taking 1% of every transaction for every eCommerce product in the world, which is sold directly from Google’s search. On the UK’s average e-commerce order value of £51, this would give them £0.51 per transaction, which isn’t hugely greater than £0.12 per click. However, they will still run shopping ads and this 1% commission may be possible on every single eCommerce listing which is published to Google Shopping.
Ignoring the theory above, let’s assume this move will hit Google’s revenue from Shopping ads significantly. Although Google’s doesn’t publish its revenue from Shopping ads, they do publish their ad revenue as a total which was $134 billion in 2019. In a recent study, it’s thought that 74% of all retail-related ad clicks are through Google Shopping. So as a very rough estimate, we could assume that between 50%-70% of the $134 billion in ad revenue comes from Google Shopping, which is a sizeable chunk.
Conclusion
This is a very big gamble by Google, whether my theory is true or not, they’re still risking a sizeable amount of steady and reliable income by making Google Shopping listings free. However, they can afford to take these risks as they apparently have around $117 billion in cash reserves which gives them than financial security to make huge changes like this.