Just as we’ve got used to buying wine online to get the best deals, Google and Amazon between them have changed their rules and are monopolising the market to make a fortune out of us! From March 2013 the best deals will now be much much harder to find as both Google and Amazon heavily promote the more expensive deals that they make the most money out of! For Google this is a gradual process and it’s likely to take some months or even longer, but eventually we’ll see less and less free to list products as they get replaced by those that are paid for.
We all trusted Google when it was a free site to give an honest comparison – but those days are coming to an end. In fact in 2004 Google actually stated that Google shopping was a fair and unbiased system precisely because they didn’t charge retailers to advertise their products! I guess when you float on the stockmarket for $80 billion or whatever it was, that you have to start clawing that money back somehow, and one way or another ultimately it has to come from the consumer!
Google Shopping is now becoming a purely commercial venture only directing you to the sites that pay them the most commission, so you the consumer also pay the highest price!
This means that they will prioritise and display products from websites which pay them, and the system is massively complicated on a “bid per click” system. Effectively retailers can only display products on Google Shopping by subscribing to an adwords campaign where they bid against each other for keywords/products. The higher the bid the higher the relevance on Google Shopping, and many retailers will disappear altogether.
This means that a retailer with a very competitive price is unlikely to get listed as they will not be able to bid as much as a retailer selling at an over inflated price – so you, the consumer, will only see the higher priced listing and end up paying this price. The over priced retailer still makes money and Google makes a lot of money while the competitive retailer loses out altogether (and possibly closes down!). And guess where that money comes from..? YOU! They rolled this out across the USA last year to great resistance from small internet retailers.
Amazon has effectively been doing something similar for the last couple of years. It lists millions of products that it doesn’t stock, with agreements in place with thousands of retailers to supply these products and pay Amazon a large commission – I know one online wine retailer was asked for 16% which when many work on 20% to 25% gross margin is just ridiculous. But it shows just how out of touch with the real world companies like Amazon really are – it’s ok for them yo base themselves in the Netherlands to (legally) avoid paying UK corporation tax, and just to take commissions off other UK retailers without doing any work, but the rest of us have to work for a living and have overheads to pay!
Both Amazon and Google Shopping are able to do this because they command all the top spots on Google, and it’s very difficult for the public to find the information they want as Google controls where it directs them. Google Shopping because it is part of Google obviously, and Amazon do it by paying for advertising with Google.
So as a consumer looking for the best deal what can you do?
Well, the good news is it is still possible (at the moment) to find a good deal, but it’s not easy. At present there are still generic product ads on there in “shopping” but these are likely to be phased out and replaced with the ads which pay the most money. But going forward the first rule ever when looking to buy something is “never use comparison sites” as by their very definition they will NEVER give you the best deal (unless you land incredibly lucky somehow). Google Shopping has become just that – a paid for comparison site, so avoid it! Comparison sites only list products/services from suppliers who pay them a commission. So if there is room in the margin to pay a comparison site, there is room to offer a better price in the first place.
For example today I googled and found a comparison site called winesdirect.co.uk who tell me the best deal in the UK for Susana Balbo Brioso is with Selfridges at £34.99 – see links below. However when I look around a bit I find the same wine with www.goodwineonline.co.uk for £24.00. So how much commission out of the £10.99 per BOTTLE (not case!) extra do you think is going to winesdirect.co.uk?
Why if they’re supposed to be a genuine comparison site do winesdirect.co.uk not know about goodwineonline’s price? Quite simply because like all comparison sites they only list wines from retailers who pay them a commission! And Google Shopping has now moved over to this format as well! Ironically they say it is to improve the customer shopping experience but this is a load of baloney as it will dramatically reduce the customer’s choice and push up the price. It is simply about making money for Google and closing down a large number of small internet retailers while strengthening the multi-nationals.
It’s also rather short sighted of Google. The general public are not stupid. They will quickly begin to realise that there’s less competition and fewer choices available to them, and they’ll shop around by using other mediums. Google will quickly lose the credibility they’ve worked so hard to build so if you own shares in Google now may be a very wise time to offload them (despite the large drop they’ve already taken!).
Small retailers will be forced to find alternative ways of advertising their products, and no doubt another search engine provider such as Bing will step in and fill the void. Google is in effect going to destroy it’s own monopoly of 80% of internet traffic! I would expect the board will be in for a torrid time at the next AGM, then down Job Centre Plus after the one following that! But who knows, just maybe they’ll see sense and realise Google is where it is today because it provided the general public with a fair, open unbiased cross section of information? Well, we can hope anyway!!
So if you value freedom of choice, and you actually want to be presented with fair and unbiased information before you make a purchase, steer well clear of Google Shopping and Amazon, as well as all other comparison sites. Spend a little time sifting through Google’s generic listings – or Yahoo, Bing etc, as you’re almost certain to find a better deal and save yourself a considerable amount of money!