Google Shopping Changes Its Business Model

Google Shopping is the world’s largest price comparison service for consumers to investigate products they want to purchase. The service had been free, but Google has announced that business model will soon be changing. The new model will require vendors to bid on clicks in the comparison. So far some of the bids are up to 40 cents, so a small business garnering 500 clicks a year will owe Google around $2000. This change may drive vendors away from Google Shopping, but may keep some around as they compete for the vacuum of services left in the wake of those leaving the service. It seems unlikely that the larger vendors like Amazon will stick around and pay Google a 7-digit sum.

This change is interpreted by some as Google’s attempt to compete with Amazon. The space that Google excels at is local and Google Shopping is an attempt to capitalize on this strength and show up the national vendors. This new change seems to help the smaller business and the social media agency that represents it by driving out the large competitors and focusing on local-availability. However, the bidding right now seems too high for the small business—with an already tight margin thanks to the large vendors—to stick around. In time the price of the clicks may drop to more manageable levels, but for now agencies and their brands need to do some careful consideration of their involvement with Google Shopping.

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