Google will make product listings on its Shopping service free, part of a broader push to expand in e-commerce and mount a bigger challenge to Amazon.com Inc. as the Covid-19 pandemic drives more consumers online.
The Alphabet Inc. unit will let merchants post their wares on Google Shopping for free regardless of whether they pay for Google ads. Before, these listings were all sponsored, meaning merchants paid Google every time someone clicked through to their website from a Google product listing.
The move may reduce advertising revenue initially, but it could also entice more merchants to use Google Shopping in the long term. The company turned the service into a paid product in 2012 and it grew into a huge business, generating billions of dollars in highly profitable revenue each quarter.
Google is returning to its original free approach for shopping, with some important caveats. The company will still sell Shopping ads, which will give merchants the option to appear in paid slots above the free listings.
Product ads will also continue to appear on the main Google search results page, while the free listings will only show up in the less-popular Shopping search tab.
“For retailers, this change means free exposure to millions of people who come to Google every day for their shopping needs,” Google said in a blog post on Tuesday.
“For shoppers, it means more products from more stores, discoverable through the Google Shopping tab. For advertisers, this means paid campaigns can now be augmented with free listings.”
Google has long wavered on its approach to commerce. The company is first and foremost an advertising platform, designed to make money whenever consumers search for things to buy online.
But in recent years, consumers have increasingly gone directly to Amazon to begin their hunt, and the online retailer has built an ad business to take advantage of this traffic.
Now, Google is trying to reaffirm its position as the go-to place for people to look for things to buy online.
“Digital commerce has a huge opportunity and it shouldn’t be the case that only a handful get to participate in that,” Bill Ready, head of Google Commerce, said in an interview.
Ready, the former chief operating officer of PayPal Holdings Inc, joined Google in January.
Ready wants Google Shopping to be a place where consumers can find products from anywhere, whether they’re sold by large or small merchants. A search for hammers could return listings from Home Depot Inc. or a neighbourhood hardware store.
The Covid-19 pandemic makes good product search even more necessary, as the best-known retailers run out of stock while smaller sellers struggle to stay afloat, Ready said.
To get more merchants listing their products on Google Shopping, the company is partnering with Ready’s old company, PayPal. Merchants who already use PayPal to process payments can integrate directly with Google Shopping.