Will Google Shopping Cannibalize Marketplace Sales?

Aug 01, 2012 8:29 PM  By

Eoin Comerford, CEO of outdoor sporting goods and apparel merchant Moosejaw Mountaineering, is concerned about the loss of free traffic his site will experience when Google Shopping goes live.

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“The loss of free traffic will definitely hurt,” Comerford says. “It is a multimillion-dollar channel for us, so replacing that with paid traffic will mean a significant, unexpected cost.”

But Comerford is also worried that Google Shopping could cannibalize his sales on the Amazon Marketplace channel. And, for that matter, that the items he’s selling via Amazon will rank higher in Google Shopping than items he’s selling at Moosejaw.com.

Comerford says Google Shopping might cut Moosejaw’s sales on Amazon, since it is unlikely that Amazon will find it cost effective to have an aggressive Google PLAs strategy. Therefore, Moosejaw will lose the sales volume that would have flowed through the Amazon Marketplace and to it.

SEO expert Stephan Spencer, the author of Google Power Search, says the question of cannibalization will depend on whether Amazon decides to market the marketplace pages in Google Shopping.

“It is possible that it would not make economical sense for them to take the risk of getting paid per sale, and potentially paying per clicks to Google,” Spencer says. “It is also possible that they negotiate a performance model with Google—and that way they can guarantee a positive return for them.”

If the model of paying per clicks doesn’t work for Amazon, Spencer says, it still has enough leverage to negotiate a performance model with Google.

“This way, they could guarantee they always win,” Spencer says. “Also, remember that a secondary goal for Amazon is always to be top of mind among shoppers. I don’t think they will ignore a main, significant channel that easily.”

But Comerford believes it won’t necessarily be a net negative, since Moosejaw will participate in Google Shopping seeking to win the top placements.

Ultimately, Comerford says, Google Shopping might be more expensive compared to Amazon’s commission model, “but we will fully own the customer (there) and have a better opportunity to retain him.”

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