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RIP Google Product Search (Froogle) - What it means for the Google and the e-commerce Industry
Part I - Details on the death of Google Product Search. (you are here) Part II - What does this mean for Google and the industry? Part III - What should retailers do? Mitigation strategies RIP Google Product Search /...

Rip_gps

  • Part I - Details on the death of Google Product Search. (you are here)
  • Part II - What does this mean for Google and the industry?
  • Part III - What should retailers do? Mitigation strategies

RIP Google Product Search / Froogle - What it means for Google and the E-commerce ecosystem

Part I - Details on the death of Google Product Search.

Today,  Google has made an announcement that will have the biggest impact on retailers since they launched Google Adwords - the end of life of the Google Product Search (Also known as Google Shopping or Froogle - for this series of blogs we will call it GPS for brevity).

The details are available in this blog post on the Google Commerce blog, but here's our quick summary: Everything you need to know about the death of GPS:

  • The new name will be Google Shopping
  • Free goes away
  • Free is replaced with Product Listing Ads - aka PLA - PLA is a program that has been around for a while that puts the image and price on the right gutter of normal search results.
  • There will be an incentive for retailers that sign up for PLA early and move everything early.

Here's what the new UI will look like->

New_gps_ui


Timing

This is still a bit fuzzy, but what we are hearing:

  • Today - announced (May 21, 2012)
  • June - Testing of new UI commences
  • July 1 - Shifting traffic to PLA at scale
  • Oct 1 - All results will be PLA (I bet this happens faster and this is a worst case - I'd plan on Aug 1 - more on this in the retailer mitigation post)
  • This is the US schedule, the other countries will follow through 2013.

What does this mean for Google, E-commerce and online retailers?

We've put together a detailed analysis using our proprietary data on both the GPS and PLA programs.

The headlines are:

  • Google Product Search drives ~$650m in annual sales (or Gross Merchandise Value) in the US. 
  • Google Product Search drives > $1.3B in global sales
  • If you replaced that lost GMV with PLA spend, you would have to spend $130m in the US/yr or > $270m/yr globally.   

The analysis

This table shows how we arrive at the $650m / $1.3b in global GMV using ChannelAdvisor's proprietary data and Comscore's data on Google Product Search:

Gps_gmv_calc


The second table shows how we arrive at the PLA cost to replace that free GMV:

Pla_cost_calc


Conclusion:

This change is going to create a substantial shift in the e-commerce ecosystem.  Google is clearly the winner, generating possibly > $250b in new revenue into the PLA system and dramatically increasing the monetization of every e-commerce query.

That's the surface impact, in the next post, we will explore the secondary and tertiary impact on the industry.  In the third post, we will discuss mediation strategies for retailers.

(Note to ChannelAdvisor customers: we are hosting a series of Webinars and strategy calls to help everyone with remediation strategies around this very impactful Google change).

SeekingAlpha disclosure - I am long Google and Amazon, eBay is an investor in ChannelAdvisor where I am CEO.

 

 

 

 

 

 

 

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