I have a huge flea market not too far from my house. When I go there and find something I want to buy, I make sure I cover the whole market first because I regularly find multiple vendors that are selling the same thing. And while the first vendor that carries the product may be presenting me with a good deal, there’s nothing like buying something only to run into the same item 10 minutes later for 10 less bucks. The horror!
So I comparison shop. I work my way through half the market, buy some lunch, cover the rest of the market, and then go back and make my purchases at the end.
While not everyone does that, it’s much more common to do it online because of Comparison Shopping Engines (CSEs) like Google Shopping. As these engines mature, they’re coming out with newer and easier ways for people to see, compare and track prices of products they’re interested in.
Just this past October, Google Shopping’s Price Insights started offering users the ability to see if a specific price is high, low, or typical; and shows different purchase and shipping options from various retailers. Plus, customers can track specific items and get notifications when they drop in price.
If only they had some type of real-time digital screen at the entrance to the flea market. I could save so much time! 🙂
If you only knew other sellers’ prices
For the sellers at the flea market, just imagine if they knew that other vendors were not only selling the same products they were selling, but who they were and what kinds of prices they were selling them at. I suppose they could walk around the market themselves and investigate. But that’s time away from selling themselves. If they could see this information, they could make decisions for themselves on how to adjust their pricing to be more competitive if they wanted to be.
With Google Shopping, this information is consolidated for you in the Price Competitiveness Report in Google Merchant Center. In the report, you’ll see these things…
- How other retailers are pricing the same products that you sell.
An average price for each product. This is based on products that got Clicks so you can understand the average price Clicks are occurring on.
- Aggregate metrics on benchmark prices over time.
How it’s helpful
This information can be incredibly helpful to business owners, pricing managers and others in some different ways…
- Campaign managers can identify if pricing could be a reason for lackluster or changing performance. If a product that’s sold by other retailers dips in performance, there’s a chance that lower prices by competition is the reason why. With this information, you can analyze if that might be the case.
- Campaign managers can get more or less aggressive with specific products. They can make pricing decisions on various brands and categories.
Price also affects visibility
This also begs the point that if a product is higher in price on average, it’s likely they’re not getting as much visibility as other retailers.
After all, if the average price for Clicks is lower than your price on a product, why would Google want to show yours? They want to show the ads that are going to get clicked since that’s how they make money. If people are using Google Shopping for price comparisons and they can find the same product for a lower price from another retailer, why would they be interested in yours?
There has been analysis on this in the past that shows price is an important element on product visibility in search results. In this article, Andreas Reiffen pointed out…
Our research found that products that are cheaper than the market average tend to generate the lion’s share of traffic in any given product feed. We might expect cheaper products to generate a higher click-through rate, explaining a higher traffic share, but the difference in impressions is clear proof that the Google Shopping algorithm favors products with lower prices and therefore serves those product ads for a higher number of relevant searches. In addition to this, we found that it was the products that were cheaper in relation to their competitors that were converting significantly better than the expensive ones.
Google has also explicitly said in the past that price competitiveness is a factor in Smart Bidding for Shopping campaigns.
Take a look at this video where I walk you through the report and how to use it…
After sending this data to a pricing manager of a client recently, they said…
This is really useful information to see. The items we’ve added in the past 12-18 months or so should all be at MSRP, while ones before that are likely all over the board. It would be interesting to see where MSRP falls within the winning bids. I need to take a deeper look at this.
With this information, this pricing manager can now do more research into understanding the market trends for their products as demand fluctuates and/or seasonal promotions are used. We can combine their knowledge about their products and the market with the data we’re seeing in their account. We may be able to find products where we’re not close on price and we won’t be. In this case, maybe we pull those products from the feed so that we don’t waste ad spend on them. On the other hand, we may find products where we have a much lower price and we can actually raise them to squeeze more margin out of them without affecting sales volume.
With this data in hand, we can work together to get even better performance from Google Shopping campaigns.